<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                             SECURITIES ACT OF 1934

               FOR THE TRANSITION PERIOD FROM _____ TO _____

                         COMMISSION FILE NUMBER 0-27890

                          MINDSPRING ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                         58-2113290
 (State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                        Identification Number)

1430 WEST PEACHTREE ST. NW, SUITE 400, ATLANTA, GA              30309
             (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code: (404) 815-0770

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                                            OUTSTANDING AT NOVEMBER 10, 1999
                                            --------------------------------

Common Stock at $.01 par value                         63,614,929


<PAGE>   2

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                          MINDSPRING ENTERPRISES, INC.
                                 BALANCE SHEETS
                 AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30,              DECEMBER 31,
                                                                                   1999                       1998
                                                                                (UNAUDITED)
                                     ASSETS
<S>                                                                             <C>                        <C>
CURRENT ASSETS:
     Cash and cash equivalents ................................................. $ 386,833                 $ 167,743
     Trade receivables, net ....................................................     5,179                     3,278
     Deferred income taxes .....................................................     6,452                     3,421
     Prepaids and other current assets .........................................     5,221                       758
                                                                                 ---------                 ---------
         Total current assets ..................................................   403,685                   175,200
                                                                                 ---------                 ---------

PROPERTY AND EQUIPMENT:
     Computer and telecommunications equipment .................................    83,065                    35,580
     Assets under capital lease ................................................     8,886                     9,546
     Other .....................................................................    14,400                     4,821
                                                                                 ---------                 ---------
                                                                                   106,351                    49,947
     Less: accumulated depreciation ............................................   (27,789)                  (14,106)
                                                                                 ---------                 ---------
         Total property and equipment, net .....................................    78,562                    35,841
                                                                                 ---------                 ---------

OTHER ASSETS:
     Acquired customer base, net ...............................................   212,441                    34,742
     Deferred debt costs .......................................................     7,302                        --
     Deferred income taxes .....................................................    17,207                     1,123
     Other .....................................................................       346                       693
                                                                                 ---------                 ---------
         Total other assets ....................................................   237,296                    36,558
                                                                                 ---------                 ---------

                                                                                 $ 719,543                 $ 247,599
                                                                                 =========                 =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Trade accounts payable .................................................... $   3,361                 $   4,990
     Current portion of capital lease liability ................................     2,608                     2,695
     Deferred revenue ..........................................................    10,710                     7,443
     Accrued telecommunications costs ..........................................    11,868                     2,831
     Other accrued expenses ....................................................    30,564                    20,135
                                                                                 ---------                 ---------

         Total current liabilities .............................................    59,111                    38,094
                                                                                 ---------                 ---------

LONG-TERM LIABILITIES:
     Convertible notes .........................................................   179,975                        --
     Capital lease obligations .................................................       526                     2,424
                                                                                 ---------                 ---------
         Total long-term liabilities ...........................................   180,501                     2,424
                                                                                 ---------                 ---------

         Total liabilities .....................................................   239,612                    40,518
                                                                                 ---------                 ---------

STOCKHOLDERS' EQUITY:
     Common stock, $.01 par value; 400,000 authorized
        And 63,575 and 56,568 issued and outstanding at
       September 30, 1999 and December 31, 1998, respectively ..................       635                       566
     Additional paid-in-capital ................................................   503,700                   209,700
     Accumulated deficit .......................................................   (24,404)                   (3,185)
                                                                                 ---------                 ---------
       Total stockholders' equity ..............................................   479,931                   207,081
                                                                                 ---------                 ---------
                                                                                 $ 719,543                 $ 247,599
                                                                                 =========                 =========
</TABLE>

                 The accompanying condensed notes to financial
           statements are an integral part of these balance sheets.


<PAGE>   3

                          MINDSPRING ENTERPRISES, INC.
                            STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                      (IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                           SEPTEMBER 30,      SEPTEMBER 30,      SEPTEMBER 30,    SEPTEMBER 30,
STATEMENTS OF OPERATIONS DATA:                                 1999               1998               1999             1998
                                                           -------------      -------------      -------------    -------------

<S>                                                        <C>                <C>                <C>              <C>
REVENUES
   Access ...............................................   $  72,631          $  24,917          $ 196,645          $ 64,795
   Business services ....................................      15,548              3,778             38,823            10,344
                                                            ---------          ---------          ---------          --------
     Total revenues .....................................      88,179             28,695            235,468            75,139
                                                            ---------          ---------          ---------          --------

COST AND EXPENSES
   Cost of revenues .....................................   $  28,367          $   7,976          $  78,882          $ 22,167
   General and administrative ...........................      28,363              9,195             74,253            25,505
   Selling ..............................................      22,366              4,806             46,503            11,735
   Depreciation .........................................       5,517              2,072             13,732             5,696
   Acquired customer base amortization ..................      23,302              1,206             60,345             3,548
                                                            ---------          ---------          ---------          --------
          Total operating expenses ......................     107,915             25,975            273,715            68,651
                                                            ---------          ---------          ---------          --------

OPERATING (LOSS) INCOME .................................     (19,736)             3,440            (38,247)            6,488
INTEREST INCOME, NET ....................................       1,977                665              3,463               590
                                                            ---------          ---------          ---------          --------

(LOSS) INCOME BEFORE TAXES ..............................     (17,759)             4,105            (34,784)            7,078

   Income tax benefit (provision) .......................       6,925               (120)            13,565              (212)
                                                            ---------          ---------          ---------          --------
NET (LOSS) INCOME .......................................   $ (10,834)         $   3,985          $ (21,219)         $  6,866
                                                            =========          =========          =========          ========

NET (LOSS) INCOME PER SHARE
                    Basic ...............................   $   (0.17)         $    0.08          $   (0.35)         $   0.14
                                                            =========          =========          =========          ========
                   Diluted ..............................   $   (0.17)         $    0.07          $   (0.35)         $   0.13
                                                            =========          =========          =========          ========

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING
                    Basic ...............................      63,475             51,585             61,042            48,086
                                                            =========          =========          =========          ========
                   Diluted ..............................      63,475             54,687             61,042            50,892
                                                            =========          =========          =========          ========
</TABLE>

            The accompanying condensed notes to financial statements
                    are an integral part of these statements


<PAGE>   4

Financial Statements - Continued

                          MINDSPRING ENTERPRISES, INC.
                            STATEMENTS OF CASH FLOWS
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    1999             1998
                                                                                 ----------       ----------
<S>                                                                              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net (loss) income ......................................................... $ (21,219)       $   6,866
     Adjustments to reconcile net (loss) income to net cash
          provided by operating activities:
     Deferred income taxes .....................................................   (19,115)              --
     Depreciation and amortization .............................................    74,077            9,244
     Changes in operating assets and liabilities:
         Other .................................................................       604               --
         Trade receivables .....................................................    (3,572)            (368)
         Other current assets ..................................................    (4,463)             441
         Trade accounts payable ................................................    (1,629)          (3,689)
         Other accrued expenses ................................................    26,466            3,061
         Deferred revenue ......................................................     3,267            2,763
                                                                                 ---------        ---------
           Total adjustments ...................................................    75,635           11,452
                                                                                 ---------        ---------
         Net Cash Provided by Operating Activities .............................    54,416           18,318
                                                                                 ---------        ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment .......................................   (43,207)         (10,282)
     Cash paid in conjunction with acquisitions ................................  (226,569)          (1,350)
     Other .....................................................................       297             (302)
                                                                                 ---------        ---------
         Net Cash Used in Investing Activities .................................  (269,479)         (11,934)
                                                                                 ---------        ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments of notes payable .................................................        --           (1,450)
     Cash provided by credit line, net of issuance costs .......................    77,987               --
     Repayment of credit line ..................................................   (80,000)              --
     Payments of capital lease obligations .....................................    (1,985)          (1,906)
     Proceeds from issuance of convertible debt ................................   174,082               --
     Issuance of common stock, net of issuance costs ...........................   264,069           50,084
                                                                                 ---------        ---------
         Net Cash Provided by Financing Activities .............................   434,153           46,728
                                                                                 ---------        ---------

NET INCREASE IN CASH AND CASH
     EQUIVALENTS ...............................................................   219,090           53,112
CASH AND CASH EQUIVALENTS, beginning of period .................................   167,743            9,386
                                                                                 ---------        ---------

CASH AND CASH EQUIVALENTS, end of period ....................................... $ 386,833        $  62,498
                                                                                 =========        =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
     Cash paid for interest .................................................... $   1,510        $     718
                                                                                 =========        =========
     Cash paid for income taxes ................................................ $   8,425        $     226
                                                                                 =========        =========
SUPPLEMENTAL NONCASH DISCLOSURES:
     Stock issued in conjunction with acquisition .............................. $  30,000        $      --
                                                                                 =========        =========
</TABLE>

           The accompanying condensed notes to financial statements
                   are an integral part of these statements.


<PAGE>   5

                          MINDSPRING ENTERPRISES, INC.
                    CONDENSED NOTES TO FINANCIAL STATEMENTS
                          SEPTEMBER 30, 1999 AND 1998

1.       Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted pursuant to
         Article 10 of Regulation S-X of the Securities and Exchange
         Commission. The accompanying unaudited condensed financial statements
         reflect, in the opinion of management, all adjustments necessary to
         achieve a fair statement of the Company's financial position and
         results for the interim periods presented. All such adjustments are of
         a normal and recurring nature. These condensed financial statements
         should be read in conjunction with the financial statements and notes
         thereto included in the Company's Annual Report on Form 10-K for the
         year ended December 31, 1998 (File No. 0-27890).

         On May 25, 1999, the Company declared a two-for-one stock split in the
         form of a stock dividend which was paid on June 25, 1999 to
         shareholders of record on June 11, 1999. Accordingly, the stock split
         has been recognized in these financial statements by reclassifying
         approximately $317,000, the par value of the additional shares issued
         as a result of the split, from additional paid in capital to common
         stock. For all periods presented, all shares outstanding and per share
         amounts have been restated to reflect the stock split.


2.       Basic (loss) earnings per common share ("EPS") was computed by
         dividing net (loss) income by the weighted average number of shares of
         common stock outstanding for the period then ended. The effect of the
         Company's stock options (using the treasury stock method) was included
         in the computation of diluted EPS for the three and nine months ended
         September 30, 1998. For the three and nine months ended September 30,
         1999, the effect of the options is excluded, as it is anti-dilutive.
         The effect of the potential conversion of the Company's 5% Convertible
         Subordinated Notes due 2006 is anti-dilutive and as such is excluded
         from diluted earnings per share for the three months and nine months
         ended September 30, 1999. The following table summarizes the shares
         used in the calculations:

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED                NINE MONTHS ENDED
         ---------------------------------------------------------------------------------------------------------------------
                                                                         SEPTEMBER 30,                    SEPTEMBER 30,
         ---------------------------------------------------------------------------------------------------------------------
         (in thousands except per share data)                       1999              1998           1999              1998
                                                                  --------          -------        --------           -------
         <S>                                                      <C>               <C>            <C>                <C>
         Weighted average shares
              Outstanding-basic .............................       63,475           51,585          61,042            48,086
         Effect of dilutive stock options ...................           --            3,102              --             2,806
                                                                  --------          -------        --------           -------
         Shares used for diluted earnings
         per share ..........................................       63,475           54,687          61,042            50,892
                                                                  ========          =======        ========           =======

         Net (loss) income ..................................     $(10,834)         $ 3,985        $(21,219)          $ 6,866
                                                                  --------          -------        --------           -------

         Basic (loss) earnings per share ....................     $  (0.17)         $  0.08        $  (0.35)          $  0.14
                                                                  --------          -------        --------           -------

         Diluted (loss) earnings per share ..................     $  (0.17)         $  0.07        $  (0.35)          $  0.13
                                                                  --------          -------        --------           -------

         ---------------------------------------------------------------------------------------------------------------------
</TABLE>


3.       On February 17, 1999, the Company completed its acquisition of certain
         assets used in connection with the United States Internet access and
         Web hosting business operated by NETCOM On-Line Communication Services
         Inc., which


<PAGE>   6

         subsequently changed its name to ICG Netahead, Inc. and is a wholly
         owned subsidiary of ICG Communications, Inc. In this transaction, the
         Company acquired NETCOM's subscriber base of approximately 408,000
         individual Internet access accounts, 25,000 Web hosting accounts and
         3,000 dedicated Internet access accounts in the United States. The
         Company paid NETCOM approximately $245 million, consisting of $215
         million in cash and $30 million in MindSpring common stock (752,232
         shares, at a price per share of $38.88). The Company also incurred
         expenses of approximately $4.2 million in connection with this
         acquisition.

         The following table summarizes the net assets purchased in connection
with this acquisition and the amount attributable to intangibles
(in thousands) :

<TABLE>
<CAPTION>
         <S>                                   <C>
         Working Capital                       $   (1,672)
         Property and Equipment                    13,200
         Acquired subscriber base                 237,695
</TABLE>



         The preliminary estimate of net assets acquired represents
         management's best estimate based on currently available information;
         however, such estimate may be revised up to one year from the
         acquisition date. The Company is amortizing the acquired customer base
         over three years.


4.       In March 1999, the Company filed a universal shelf registration
         statement with the Securities and Exchange Commission for the public
         offering from time to time of up to $800 million of debt and equity
         securities. In April 1999, the Company completed two public offerings
         of securities under this shelf registration statement. The Company
         sold 5,520,000 shares of common stock, raising net proceeds of
         approximately $263.2 million, out of which the Company repaid all
         amounts outstanding under its secured credit facility. The Company
         also sold $179,975,000 aggregate principal amount of 5% Convertible
         Subordinated Notes due 2006, raising net proceeds of approximately
         $174.1 million. The remaining proceeds from these offerings will be
         used for expansion of our business, as additional working capital for
         general corporate purposes, and for strategic acquisitions of
         subscriber accounts and complementary businesses.

5.       On September 23, 1999, the Company announced that it had entered into
         an Agreement and Plan of Reorganization, dated September 22, 1999 (the
         "Merger Agreement"), with Earthlink Network, Inc. ("Earthlink"). The
         Merger Agreement sets forth the terms and conditions of the proposed
         Merger of MindSpring and Earthlink into a new company (the "Merger").
         The Merger is structured to be a stock-for-stock Merger of equals.
         Pursuant to the Merger Agreement, each share of common stock of
         MindSpring will be converted into one share of common stock of the new
         company, and each share of common stock of Earthlink will be converted
         into 1.615 shares of common stock of the new company. Other
         outstanding securities of the two companies will be converted on the
         same basis. Upon consummation of the Merger, the new company will be
         renamed Earthlink, Inc. The parties intend for the Merger to be
         treated as a tax-free reorganization under Section 368 of the Internal
         Revenue Code of 1986, as amended, and as a "pooling-of-interests" for
         accounting purposes. Subject to several conditions, including receipt
         of required regulatory approvals, approval by both companies'
         shareholders, and certain third-party consents, the Merger is expected
         to close in the first quarter of 2000. For a more detailed discussion
         of the Merger, see Current Report on Form 8-K filed with the
         Securities and Exchange Commission on September 30, 1999 and the
         amendment on Form 8-K/A filed on October 12, 1999.


<PAGE>   7

ITEM 2-

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements regarding our expected financial position
and operating results, our business strategy and our financing plans are
forward-looking statements. These statements can sometimes be identified by our
use of forward-looking words such as "may," "will," "anticipate," "estimate,"
"expect," or "intend." Known and unknown risks, uncertainties and other factors
could cause our actual results to differ materially from those contemplated by
these statements. Such risks and uncertainties include our ability to retain
and grow our subscriber base, our ability to successfully integrate new
subscribers and/or assets obtained through acquisitions, the highly competitive
markets in which we operate and our ability to respond to technological
developments affecting the Internet. The Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998, filed with the Securities and
Exchange Commission on March 30, 1999, discusses some additional important
factors that could cause the Company's actual results to differ materially from
those in such forward-looking statements.

         All common stock numbers and per share amounts in this report give
effect to a 3-for-1 stock split effected by MindSpring in July 1998 and a
2-for-1 stock split effected by MindSpring in June 1999.

OVERVIEW

         MindSpring is a leading national Internet service provider, or ISP. On
         September 23, 1999, MindSpring announced that it had entered into an
         Agreement and Plan of Reorganization, dated September 22, 1999 (the
         "Merger Agreement"), with Earthlink Network, Inc. ("Earthlink"). The
         Merger Agreement sets forth the terms and conditions of the proposed
         Merger of MindSpring and Earthlink into a new company (the "Merger").
         The Merger is structured to be a stock-for-stock Merger of equals.
         Pursuant to the Merger Agreement, each share of common stock of
         MindSpring will be converted into one share of common stock of the new
         company, and each share of common stock of Earthlink will be converted
         into 1.615 shares of common stock of the new company. Other
         outstanding securities of the two companies will be converted on the
         same basis. Upon consummation of the Merger, the new company will be
         renamed Earthlink, Inc. The parties intend for the Merger to be
         considered a tax-free reorganization under Section 368 of the Internal
         Revenue Code of 1986, as amended, and as a "pooling-of-interests" for
         accounting purposes. Subject to several conditions, including
         regulatory approvals, approval by both companies' shareholders, and
         certain third-party consents, the transaction is expected to close in
         the first quarter of 2000. For a more detailed discussion of the
         Merger, see our Current Report on Form 8-K filed with the Securities
         and Exchange Commission on September 30, 1999 and our amendment on
         Form 8-K/A filed on October 12, 1999.




         MindSpring focuses on serving individuals and small businesses. Our
subscribers use their MindSpring accounts to, among other things, communicate,
retrieve information, and publish information on the Internet. Our primary
service offerings are dial-up Internet access and business services which we
offer in various price and usage plans designed to meet the needs of our
subscribers. Our business services include Web hosting, which entails
maintaining a customer's Web site; high-speed, dedicated Internet access; Web
page design; and domain name registration. Web hosting, our principal business
service, complements our Internet access business and is one of the fastest
growing segments of the Internet marketplace.


         We offer our subscribers:


<PAGE>   8


         -        user-friendly and easy to install software, containing a
                  complete set of the most popular Internet applications
                  including electronic mail, World Wide Web access, Network
                  News, File Transfer Protocol and Internet Relay Chat;

         -        highly responsive customer service, and technical support
                  which is available 24 hours a day, seven days a week; and

         -        a reliable nationwide network that enables subscribers in the
                  48 contiguous United States and the District of Columbia to
                  access the Internet via a local telephone call.

         Our nationwide network consists of MindSpring-owned points of
presence, or "POPs," and POPs that are owned by other companies with which we
have service agreements. Through these service agreements, we have the
flexibility to offer Internet access in a particular market through a
MindSpring-owned POP, a third party network provider's POP or a combination of
the two. As part of our efforts to control quality and cost, we typically seek
to increase the number of MindSpring-owned POPs in markets where we have higher
numbers of subscribers.

         MindSpring has grown rapidly by:

         -        providing superior customer service and technical support;

         -        expanding marketing and distribution activities;

         -        making strategic acquisitions; and

         -        creating additional revenue streams by offering value-added
                  services such as Web hosting that build on our basic
                  operating capabilities and services.

         We have increased our subscriber base from approximately 12,000
subscribers at December 31, 1995 to approximately 1,297,000 subscribers at
September 30, 1999, including approximately 61,000 Web hosting subscribers and
approximately 3,000 Dedicated Internet access subscribers.

         In addition, we have rapidly increased revenues. From our inception in
February 1994 through 1997, we experienced annual net operating losses as a
result of efforts to build our network infrastructure and internal staffing,
develop our systems, and expand into new markets. During 1997, we generated
positive cash flows from operations, with EBITDA of approximately $5 million.
We had our first year of profitability in 1998, with net income of
approximately $8.8 million, excluding a one-time tax benefit of approximately
$1.7 million. Including the one-time tax benefit, our net income for 1998 was
approximately $10.5 million. In the third quarter of 1999, in an effort to
continue to build our subscriber base, we increased our sales and marketing
expenditures from traditional levels. This, along with the amortization charges
related to our acquisitions of subscriber bases in the fourth quarter of 1998
and the first quarter of 1999, had a direct impact on our EBITDA and net
income. For the three months ended September 30, 1999, we had revenues of
approximately $88.2 million, EBITDA of approximately $9.1 million, a net loss
of approximately $(10.8) million and net loss per share of $(0.17). Excluding
tax-effected amortization expense related to our acquisitions of subscriber
bases, net income for the three months ended September 30, 1999 was
approximately $3.4 million. Excluding tax-effected amortization expense, net
income per share ("EPS+A") for this period was $0.05 per diluted share. For the
nine months ended September 30, 1999, we had revenues of approximately $235.5
million, EBITDA of approximately $35.8 million, a net loss of approximately
$(21.2) million and net loss per share of $(0.35). Excluding tax-effected
amortization expense related to our acquisitions of subscriber bases, net
income for the nine months ended September 30, 1999 was approximately $15.6
million. EPS+A for this period was $0.24 per diluted share.

         We expect to continue to focus on increasing our subscriber base.
Increases in our subscriber base will cause our revenues to increase but will
also cause our costs of revenue, selling, general and administrative expenses,
capital expenditures, and depreciation and amortization to increase. Our
purchases of subscriber bases such as the Spry and NETCOM acquisitions,
described below, cause an immediate increase in our amortization expense. We
generally amortize subscriber acquisitions over a three-year period. We expect
that annual amortization expense attributable to these


<PAGE>   9

transactions will be between approximately $85 and $90 million per year through
2001. To the extent we continue to expand our subscriber base through
acquisitions such as the Spry and NETCOM acquisitions, we will continue to
experience increased amortization expense.


         We plan to continue to increase our subscriber base through other
means in addition to subscriber base acquisitions. In July 1999, we announced
an accelerated organic growth marketing effort in which we would increase our
sales and marketing expenditures in both the fourth quarter 1999 and the first
quarter 2000. We stated that we would focus a large portion of the additional
expenditures on a national branding campaign, primarily involving television
advertisements, which began in September. The branding campaign was an integral
part of the accelerated growth initiative. We expected that these incremental
sales and marketing expenditures would result in increased subscriber growth
beginning in the fourth quarter of 1999 and continue into the first quarter of
2000. Under the proposed Merger with EarthLink, the combined company is
expected to conduct business under the EarthLink brand name. Therefore, we have
made adjustments to our existing marketing plans to focus less on branding
initiatives and more on direct subscriber acquisition channels in the fourth
quarter. Overall, we expect our sales and marketing expenditures in the fourth
quarter of 1999 to be significantly higher than our historical levels, but less
than anticipated in our original announcement of the accelerated organic growth
marketing effort.

         We expect to incur negative EBITDA for the fourth quarter of 1999 and
the first quarter of 2000, primarily as a result of increased sales and
marketing expenditures, and we expect to incur net losses through 2000,
primarily as a result of the amortization expense associated with the Spry and
NETCOM acquisitions and the increased sales and marketing expenditures.

         Spry and NETCOM Acquisitions. On October 15, 1998, we completed our
acquisition of the customer base and certain related assets of Spry, Inc. The
total purchase price for the Spry acquisition was approximately $32 million. On
February 17, 1999, we completed the purchase of certain assets used in
connection with the United States Internet access and web hosting business
operated by NETCOM On-Line Communication Services for approximately $245
million, consisting of $215 million in cash and $30 million in MindSpring
common stock (752,232 shares, at a price per share of $39.88).



         Credit Facility. On February 17, 1999, we entered into a credit
agreement with First Union National Bank ("First Union") and several other
lenders. The credit agreement provides for a $100 million revolving credit
facility that may be increased at our option to $200 million with the approval
of First Union and the other lenders under the credit agreement. The credit
facility will mature on February 17, 2002. The credit facility is to be used to
fund working capital and for general corporate purposes, including permitted
acquisitions. Our obligations under the credit facility are secured by
substantially all of MindSpring's assets. On February 17, 1999, we borrowed
approximately $80 million under the credit facility to finance the NETCOM
acquisition. We repaid all amounts outstanding under the credit facility with a
portion of the net proceeds from our April 1999 offering of 5,520,000 shares of
common stock, and we amended the credit facility to permit the issuance of
notes, the payment of interest thereon, and certain redemptions thereof. For a
more detailed description of our secured credit facility, see our Current
Report in form 8-K filed with the Securities and Exchange Commission on
February 25, 1999.


         Securities Offerings during 1999. In March 1999, we filed a universal
shelf registration statement with the Securities and Exchange Commission for
the public offering from time to time of up to $800 million of debt and equity
securities. In April 1999, we completed two public offerings of securities
under this shelf registration statement. We sold 5,520,000 shares of common
stock, raising net proceeds of approximately $263.2 million, out of which we
repaid all amounts outstanding under the secured credit facility. We also sold
$179,975,000 aggregate principal amount of 5% Convertible Subordinated Notes
due 2006, raising net proceeds of approximately $174.1 million. The remaining
proceeds from these offerings will be used for expansion of our business, as
additional working capital for general corporate purposes, and for strategic
acquisitions of subscriber accounts and complementary businesses.


<PAGE>   10

         Revenues. MindSpring derives revenue primarily by providing
individuals with dial-up access to the Internet. Monthly subscription fees vary
by billing plan. Under MindSpring's current pricing plans, customers have a
choice of several "flat rate" plans (The Works and Unlimited Access, e.g.) and
several "usage sensitive" plans (Standard and Light, e.g.). MindSpring also has
a prepayment plan available to all dial-up subscribers which allows subscribers
to prepay their access fees for either one or two years at a discounted rate.
For the three months ended September 30, 1999, the average monthly recurring
revenue per dial-up subscriber was approximately $20.

         In addition, MindSpring earns revenue by providing Web hosting,
full-time dedicated access connections to the Internet, and other value-added
services such as Web page design and domain registration. MindSpring's Web
hosting services allow a business or individual to post information on the
World Wide Web so that the information is available to anyone who has access to
the Internet. MindSpring currently offers price plans for Web hosting
subscribers ranging from $19.95 to $99.95 per month. MindSpring had
approximately 61,000 Web hosting subscribers as of September 30, 1999. Through
our domain registration services, MindSpring offers subscribers the ability to
personalize electronic mail addresses and URLs (Uniform Resource Locators). The
revenue from the services described in this paragraph have been classified as
business services in MindSpring's statements of operations and in the "Results
of Operations" table shown below.

         Costs. MindSpring's costs include (1) costs of revenue that are
primarily related to the number of subscribers; (2) selling, general and
administrative expenses that are associated more generally with operations; and
(3) depreciation and amortization, which are related to the number and amounts
of MindSpring-owned POPs and other equipment, and the deferred costs associated
with acquired customer bases.

         Costs of revenue that are primarily related to the number of
subscribers consist primarily of the costs of telecommunications facilities
necessary to provide service to subscribers. Telecommunications facilities
costs include (1) the costs of providing local telephone lines into each
MindSpring-owned POP; (2) costs related to the use of third party networks; and
(3) costs associated with leased lines connecting each MindSpring-owned POP and
third party network to MindSpring's hub and connecting MindSpring's hub to the
Internet backbone.

         Selling, general and administrative costs are incurred in the areas of
sales and marketing, customer service and technical support, network operations
and maintenance, engineering, accounting and administration. Selling, general
and administrative costs will increase over time as MindSpring's scope of
operations increases. As noted above, we have significantly increased the level
of marketing activity beginning in the third quarter of 1999 to increase the
rate of subscriber growth. Our new marketing strategy is expected to have a
short-term negative impact on net income. We believe that these increased costs
will result in greater subscriber growth; however, there can be no assurance
that these additional sales and marketing expenditures will result in
significantly greater subscriber growth. MindSpring does not defer any sales or
marketing expenses.

         As MindSpring expands into new markets, both costs of revenue and
selling, general and administrative expenses will increase. To the extent
MindSpring opens MindSpring POPs in new markets, these costs and expenses may
also increase as a percentage of revenue in the short term for the period
immediately after a new MindSpring POP is opened. Many of the fixed costs of
providing service in a new market through a new MindSpring POP are incurred
before significant revenue can be expected from that market. However, to the
extent that we expand into new markets by using third party POPs instead of
opening our own POPs, MindSpring's incremental monthly recurring costs will
consist primarily of the fees to be paid to third parties under network
services agreements. In general, the margins on those subscribers will
initially be higher than if we had opened our own POP in new markets. When a
market matures, if the market is served through purchased, third party network
services rather than MindSpring-owned POPs, costs of revenue as a percentage of
revenue will tend to be higher, and therefore, margins on subscribers will tend
to be lower. This is because the full costs of using third party networks is
included in costs of revenue, as compared to the costs of using
MindSpring-owned POPs, a portion of which is included in depreciation. In
addition, in more mature markets where we have greater concentrations of
subscribers, we often can provide services at a lower cost per subscriber
through MindSpring-owned POPs after the initial period when related expenses
are higher. This depends in part on how much we must pay for local area
telecommunications charges and the cost of available alternative third party
providers.


<PAGE>   11

         In connection with the NETCOM acquisition, ICG Netahead retained the
network assets that they formerly used to serve the customers we acquired. We
purchase access to that network under a network services agreement with a term
of one year and an option for a second year on potentially different terms to
be agreed upon by the parties. During the first year of the network services
agreement with ICG Netahead, we will pay for use of ICG Netahead's POPs at
rates that are generally comparable to the costs of using MindSpring POPs.


<PAGE>   12

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1998

         The following table shows unaudited financial data for the three
months ended September 30, 1999 and 1998. Operating results for any period are
not necessarily indicative of results for any future period. Dollar amounts are
shown in thousands (except per share data)


<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED                 THREE MONTHS ENDED
                                                                       SEPTEMBER 30, 1999                 SEPTEMBER 30, 1998

                                                                                       % OF                              % OF
STATEMENTS OF OPERATIONS DATA:                                      (000'S)           REVENUE           (000'S)         REVENUE
                                                                  -----------         --------         ---------        -------


<S>                                                               <C>                 <C>              <C>              <C>
REVENUES
   Access                                                         $    72,631               82         $ 24,917              87
   Business services                                                   15,548               18            3,778              13
                                                                  -----------         --------         --------         -------
     Total revenues                                                    88,179              100           28,695             100

COST AND EXPENSES
                                                                       28,367               32            7,976              28
                                                                  -----------         --------         --------         -------
     Gross margin                                                      59,812               68           20,719              72

   General and administrative                                          28,363               32            9,195              32
   Selling                                                             22,366               26            4,806              17
                                                                  -----------         --------         --------         -------
     EBITDA (1)                                                         9,083               10            6,718              23

   Depreciation                                                         5,517                6            2,072               7
   Acquired customer base amortization                                 23,302               26            1,206               4
                                                                  -----------         --------         --------         -------
OPERATING (LOSS) INCOME                                               (19,736)             (22)           3,440              12
INTEREST INCOME, NET                                                    1,977                2              665               2
                                                                  -----------         --------         --------         -------
(LOSS) INCOME BEFORE TAXES                                            (17,759)             (20)           4,105              14

   Income tax benefit (expense)                                         6,925                8             (120)             (0)
                                                                  -----------         --------         --------         -------
NET (LOSS) INCOME                                                 $   (10,834)             (12)        $  3,985              14
                                                                  ===========                          ========

NET (LOSS) INCOME PER SHARE
Basic                                                             $     (0.17)                         $   0.08

Diluted                                                           $     (0.17)                         $   0.07

</TABLE>


<PAGE>   13

<TABLE>
<CAPTION>
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING
<S>                                                                 <C>                                <C>
Basic                                                                  63,475                           51,585

Diluted                                                                63,475                           54,687

OTHER OPERATING DATA:

     Approx. number of subscribers at end of period                 1,297,000                          455,000
     Number of employees at end of period                               2,051                              732
</TABLE>

(1)      EBITDA represents earnings before interest expense, income taxes,
         depreciation and amortization. EBITDA is not a measurement of
         financial performance under generally accepted accounting principles
         and should not be considered an alternative to net income as a measure
         of performance.

         REVENUE. Revenues for the three months ended September 30, 1999
totaled approximately $88,179,000 as compared to approximately $28,695,000 for
the three months ended September 30, 1998. This approximately 207% increase in
period revenues resulted primarily from a 185% increase in total subscribers.
The increase in subscribers is due to the acquisition of the NETCOM subscribers
in February 1999, the acquisition of Spry subscribers in October 1998, and
organic growth. Revenues from access to the Internet, which include start-up
fees and advertising revenues, represented approximately 82% of total revenue
for the three months ended September 30, 1999 vs. 87% for the three months
ended September 30, 1998. Business services revenue, consisting primarily of
Web-hosting and dedicated Internet access, grew to 18% of total revenue for the
three months ended September 30, 1999 from 13% for the three months ended
September 30, 1998. This increase in business service revenue as a percentage
of total revenue for the three months ended September 30, 1999 as compared to
the three months ended September 30, 1998 can be attributed to the growth in
our business service customer base.

         COSTS OF REVENUES. For the three months ended September 30, 1999, cost
of revenues increased to approximately 32% of total revenue, compared to
approximately 28% of total revenue for the three months ended September 30,
1998. Cost of revenues increased as a percentage of total revenues as a result
of a greater percentage of our subscribers being served by third party networks
rather than MindSpring POPs primarily due to the Spry and NETCOM acquisitions.
Cost of revenues for subscribers being serviced by MindSpring POPs does not
include depreciation for these POP's and other related equipment.


         SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Selling, general, and
administrative expenses were approximately 58% of revenue for the three months
ended September 30, 1999, compared to approximately 49% of revenue for the
three months ended September 30, 1998. This increase was due to sales and
marketing costs increasing to 26% of revenue for the three months ended
September 30, 1999 from 17% for the three months ended September 30, 1999.
Selling costs increased due primarily to higher advertising expenditures
related to the Company's accelerated growth program initiated in September
1999.


         EBITDA MARGIN. EBITDA margin refers to EBITDA as a percentage of
revenues. EBITDA margin decreased to 10% of revenues for the three months ended
September 30, 1999 from 23% of revenues for the three months ended September
30, 1998. This decrease is primarily attributable to the increased sales and
marketing expenditures and higher costs of revenue.


<PAGE>   14

         DEPRECIATION AND AMORTIZATION. Customer base amortization expense
increased significantly from 4% of revenues for the three months ended
September 30, 1998 to 26% for the three months ended September 30, 1999 due to
the acquisitions of the Spry and NETCOM customer bases, which are being
amortized over three years. Depreciation expense decreased from 7% of revenues
for the three months ended September 30, 1998 to 6% of revenues for the three
months ended September 30, 1999 due to a smaller percentage of our subscriber
base being served by the Company-owned network.

         INTEREST INCOME, NET. Interest income (expense), net was approximately
$1,977,000 for the three months ended September 30, 1999 compared to
approximately $665,000 for the three months ended September 30, 1998. This
increase in interest income (expense), net for the three months ended September
30, 1999 compared to the three months ended September 30, 1998 was primarily
due to interest income increasing as a result of the increase in cash available
for investment purposes, net of interest expense increasing, resulting from our
equity offering and our convertible debt offering which were both completed in
April 1999. The offerings raised net proceeds of approximately $437 million
from which we repaid $80 million outstanding under our secured credit facility.
Interest expense includes interest on our 5% Convertible Subordinated Notes due
2006 and fees related to our unused credit facility as well as the amortization
of deferred financing costs associated with both.


         INCOME TAX BENEFIT (PROVISION). For the three months ended September
30, 1999, the Company recorded an income tax benefit of $6,925,000, for an
effective tax rate of 39%, compared to an income tax provision of $120,000, for
an effective tax rate of 3%, for the three months ended September 30, 1998.


         NET (LOSS) INCOME AND (LOSS) INCOME PER SHARE. As discussed above, and
primarily as a result of the increase in acquired customer base amortization
and sales and marketing expenditures, the Company had a net loss for the three
months ended September 30, 1999 of ($10,834,000) or $(0.17) per basic and
diluted share. The Company's net income for the three months ended September
30, 1998 was $3,985,000 or $0.07 per diluted share. Excluding tax-effected
customer based amortization expense, the Company recorded earnings of
$3,380,000 or $0.05 per diluted share ("EPS+A") for the three months ended
September 30, 1999 and earnings of $4,721,000 or $0.09 per diluted share for
the three months ended September 30, 1998.


<PAGE>   15

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1998

         The following table shows unaudited financial data for the nine months
ended September 30, 1999 and 1998. Operating results for any period are not
necessarily indicative of results for any future period. Dollar amounts are
shown in thousands (except per share data)

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED                 NINE MONTHS ENDED
                                                                      SEPTEMBER 30, 1999                SEPTEMBER 30, 1998

                                                                                       % OF                              % OF
STATEMENTS OF OPERATIONS DATA:                                      (000'S)           REVENUE          (000'S)          REVENUE
                                                                  -----------         --------         --------         -------


<S>                                                               <C>                 <C>              <C>              <C>
REVENUES
   Access                                                         $   196,645               84         $ 64,795              86
   Business services                                                   38,823               16           10,344              14
                                                                  -----------         --------         --------         -------
     Total revenues                                                   235,468              100           75,139             100

COST AND EXPENSES
   Cost of revenues                                                    78,882               33           22,167              30
                                                                  -----------         --------         --------         -------
     Gross margin                                                     156,586               67           52,972              70

   General and administrative                                          74,253               32           25,505              34
   Selling                                                             46,503               20           11,735              15
                                                                  -----------         --------         --------         -------
     EBITDA (1)                                                        35,830               15           15,732              21

   Depreciation                                                        13,732                6            5,696               8
   Acquired customer base amortization                                 60,345               26            3,548               5
                                                                  -----------         --------         --------         -------

OPERATING (LOSS) INCOME                                               (38,247)             (16)           6,488               8
INTEREST INCOME, NET                                                    3,463                1              590               1

                                                                  -----------         --------         --------         -------
(LOSS) INCOME BEFORE TAXES                                            (34,784)             (15)           7,078               9

   Income tax benefit (expense)                                        13,565                6             (212)             (0)
                                                                  -----------         --------         --------         -------
NET(LOSS) INCOME                                                  $   (21,219)              (9)        $  6,866               9
                                                                  ===========                          ========

NET (LOSS) INCOME PER SHARE
Basic                                                             $     (0.35)                         $   0.14

Diluted                                                           $     (0.35)                         $   0.13
</TABLE>


<PAGE>   16

<TABLE>

<S>                                                                  <C>                               <C>
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING
Basic                                                                   61,042                          48,086

Diluted                                                                 61,042                          50,892

OTHER OPERATING DATA:

     Approx. number of subscribers at end of period                  1,297,000                         455,000
     Number of employees at end of period
                                                                         2,051                             732
</TABLE>

(1)      EBITDA represents earnings before interest expense, income taxes,
         depreciation and amortization. EBITDA is not a measurement of
         financial performance under generally accepted accounting principles
         and should not be considered an alternative to net income as a measure
         of performance.

         REVENUE. Revenues for the nine months ended September 30, 1999 totaled
approximately $235,468,000 as compared to approximately $75,139,000 for the
nine months ended September 30, 1998. This approximately 213% increase in
period revenues resulted primarily from a 185% increase in total subscribers.
The increase in subscribers is due to the acquisition of the NETCOM subscribers
in February 1999, the acquisition of Spry subscribers in October 1998 and
organic growth. Revenues from dial-up access to the Internet, which include
start-up fees and advertising revenues, represented approximately 84% of total
revenue for the nine months ended September 30, 1999 vs. 86% for the nine
months ended September 30, 1998. Business services revenue, consisting
primarily of Web-hosting and dedicated Internet access, grew to 16% of total
revenue for the nine months ended September 30, 1999 from 14% for the nine
months ended September 30, 1998. This increase in business service revenue as a
percentage of total revenue for the nine months ended September 30, 1999 as
compared to the nine months ended September 30, 1998 can be attributed to the
growth in our business service customer base.



         COSTS OF REVENUES. For the nine months ended September 30, 1999, cost
of revenues increased to approximately 33% of total revenue, compared to
approximately 30% of total revenue for the nine months ended September 30,
1998. Cost of revenues increased as a percentage of total revenues as a result
of a greater percentage of our subscribers being served through the use of
third party networks rather than MindSpring POPs due to the Spry and NETCOM
acquisitions. Cost of revenues for subscribers being serviced by MindSpring
POP's does not include depreciation for these POPs and other related equipment.



         SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Selling, general, and
administrative expenses were approximately 52% of revenue for the nine months
ended September 30, 1999, compared to approximately 49% of revenue for the nine
months ended September 30, 1998. This increase was due to higher sales and
marketing costs increasing to 20% of revenue for the nine months ended
September 30, 1999 from 15% for the nine months ended September 30, 1999.
Selling costs increased due primarily to higher advertising expenditures
related to the Company's accelerated growth program initiated in September 1999
offset by general and administrative costs declining to 32% of revenue for the
nine months ended September 30, 1999 from 34% for the nine months ended
September 30, 1998. General and administrative costs decreased due to
efficiencies gained primarily through economies of scale.


         EBITDA MARGIN. EBITDA margin refers to EBITDA as a percentage of
revenues. EBITDA margin decreased to 15% of revenues for the nine months ended
September 30, 1999 from 21% of revenues for the nine months ended September 30,
1998. This decrease is primarily attributable to the increased sales and
marketing expenditures and to costs of revenue being relatively higher in 1999.


<PAGE>   17

         DEPRECIATION AND AMORTIZATION. Customer base amortization expense
increased significantly from 5% of revenues for the nine months ended September
30, 1998 to 26% for the nine months ended September 30, 1999 due to the
acquisitions of the Spry and NETCOM customer bases, which are being amortized
over three years. Depreciation expense decreased from 8% of revenues for the
nine months ended September 30, 1998 to 6% of revenues for the nine months
ended September 30, 1999 due to a smaller percentage of our subscriber base
being served by the company-owned network.

         INTEREST INCOME, NET. Interest income (expense), net was approximately
$3,463,000 for the nine months ended September 30, 1999 compared to
approximately $590,000 for the nine months ended September 30, 1998. This
increase in interest income (expense), net for the nine months ended September
30, 1999 compared to the nine months ended September 30, 1998 was primarily due
to interest income increasing as a result of the increase in cash available for
investment purposes, net of interest expense increasing, resulting from equity
offerings in December 1998 and April 1999 and a convertible debt offering
completed in April 1999. The offerings raised net proceeds of approximately
$562 million from which we repaid $80 million outstanding under a secured
credit facility. Interest expense includes interest on our 5% Convertible
Subordinated Notes due 2006 and fees related to our unused credit facility as
well as amortization of deferred financing costs incurred in conjunction with
both.


         INCOME TAX BENEFIT (PROVISION). For the nine months ended September
30, 1999, the Company recorded an income tax benefit of $13,565,000 for an
effective tax rate of 39%, compared to an income tax provision of $212,000, for
an effective tax rate of 3% for the nine months ended September 30, 1998.


         NET (LOSS) INCOME AND (LOSS) INCOME PER SHARE. As discussed above, and
primarily as a result of the increase in sales and marketing expenditures and
in acquired customer base amortization, the Company had a net loss for the nine
months ended September 30, 1999 of ($21,219,000) or $(0.35) per basic and
diluted share. The Company's net income for the nine months ended September 30,
1998 was $6,866,000 or $0.13 per diluted share. Excluding tax-effected customer
based amortization expense, the Company recorded earnings of $15,591,000 or
$0.24 per diluted share ("EPS+A") for the nine months ended September 30, 1999
and earnings of $9,030,000 or $0.18 per diluted share for the nine months ended
September 30, 1998.





         LIQUIDITY AND CAPITAL RESOURCES

         For the nine months ended September 30, 1999, MindSpring generated net
cash from operations of approximately $54.4 million, compared to $18.3 million
for the nine months ended September 30, 1998, an increase of approximately
197%. During the first nine months of 1999, we spent a total of approximately
$43.2 million primarily related to purchases of telecommunications equipment
necessary for the provision of service to subscribers. We did not enter into
any capital lease agreements in the first nine months of 1999. On February 17,
1999, we paid $215 million in cash to ICG in connection with the closing of the
NETCOM acquisition, approximately $80 million of which we borrowed under our
$100 million secured revolving credit facility, which we repaid as discussed
below, and the remainder from our available cash.

         As of September 30, 1999, we had approximately $386.8 million of cash.
In March 1999, we filed a universal shelf registration statement with the
Securities and Exchange Commission for the public offering from time to time of
up to $800 million of debt and equity securities. In April 1999, we completed
two public offerings of securities under this shelf registration statement. We
sold 5,520,000 shares of our common stock raising net proceeds of approximately
$263.2 million, from which we repaid approximately $80 million of principal and
interest outstanding under our secured credit facility. We also sold
$179,975,000 aggregate principal amount of our 5% Convertible Subordinated
Notes due 2006, raising net proceeds of approximately $174.1 million. Net of
expenses and repayment of debt, the Company raised an aggregate of
approximately $357.3 million in these offerings.


<PAGE>   18

         MindSpring's future capital requirements depend on various factors
including, without limitation:

         -        the rate of market acceptance of MindSpring's services;

         -        our ability to maintain and expand our subscriber base;

         -        the rate of expansion of MindSpring's network infrastructure;

         -        the resources required to expand our marketing and sales
                  efforts; and

         -        the availability of hardware and software provided by third
                  party vendors.


         We currently estimate that our cash and financing needs for 1999 can
be met by cash on hand, amounts available under our credit facility, additional
capital financing arrangements, and cash flow from operations. If our credit
facility is unavailable or if our expectations change regarding our capital
needs due to market conditions, strategic opportunities or otherwise, then our
capital requirements may vary materially from those currently anticipated. We
do not currently have any commitments for any additional financing, and there
can be no assurance that if and when we need additional capital it will be
available on terms that are acceptable to us, if at all. If additional capital
financing arrangements, including public or private sales of debt or equity
securities, or additional borrowings from commercial banks are insufficient or
unavailable, or if we experience shortfalls in anticipated revenues or
increases in anticipated expenses, we will be required to modify our growth and
operating plans to match available funding. Any additional equity financing may
be on terms that are dilutive or potentially dilutive to MindSpring's
stockholders. Debt financing, if available, may involve restrictive covenants
with respect to dividends, raising future capital and other financial and
operational matters and incurring additional debt may further limit
MindSpring's ability to raise additional capital. In addition, our credit
facility contains restrictions on our ability to incur additional debt and to
issue some types of convertible or redeemable capital stock.

         MindSpring frequently engages in discussions involving potential
business combinations. Depending on the circumstances, MindSpring may not
disclose material transactions until completion of a definitive agreement.
MindSpring may determine to raise additional debt or equity capital to finance
potential acquisitions and/or to fund accelerated growth. Any significant
acquisitions or increases in MindSpring's growth rate could materially affect
MindSpring's operating and financial expectations and results, liquidity and
capital resources.

         As referenced in Form 8-K, as a result of the Merger, the holders of
the 5% Convertible Subordinated Notes due 2006 will have the option to require
the new Company to repurchase the notes. Pursuant to the Merger Agreement, the
repurchase price for the notes will be paid in cash at a repurchase price of
100% of the principal amount plus accrued interest to the date of repurchase.





         YEAR 2000


         Introduction. The term "Year 2000 issue" is a general term used to
describe the various problems that may result from the improper processing of
dates and date-sensitive calculations by computers and other machinery as the
year 2000 is approached and reached. These problems generally arise from the
fact that most of the world's computer hardware and software have historically
used only two digits to identify the year in a date, often meaning that the
computer will fail to distinguish dates in the "2000's" from dates in the
"1900's." These problems may also arise from other sources as well, such as the
use of special codes and conventions in software that make use of the date
field.

         State of Readiness. We have established a Year 2000 program office to
coordinate appropriate activity and report to the Board of Directors on a
continuing basis with regard to the Year 2000 issue. Our Year 2000 program
office has developed and is currently implementing a comprehensive Year 2000
program for us to become Year 2000 ready. The Year


<PAGE>   19

2000 program consists of six phases: (1) project planning and inventory of our
assets, (2) assessment of remediation requirements, (3) remediation (whether by
upgrade or replacement), (4) testing and validation of selected critical
assets, (5) implementation and (6) creation of contingency plans in the event
of year 2000 failures.

         The Year 2000 program covers the following: (1) internally developed
software products which we provide to our customers, (2) our information
technology systems, (3) our network elements, (4) our operational support
systems, and (5) certain non-information technology systems, including embedded
technology. In addition, the program calls for us to identify and assess the
systems and services of our third party suppliers, such as major vendors, third
party network service providers and other material service providers, and take
appropriate remedial actions and develop contingency plans where appropriate in
connection with such third party suppliers.


         We provide our customers with a software package which, among other
things, allows our customers to access our services. The software package
consists of internally developed software (e.g., the MindSpring Internet
software) which is bundled with third party software. We have conducted
operational testing and believe that the current shipping version of the
MindSpring Internet software is Year 2000 ready.

         As of November 10, 1999, we have completed the inventory and
assessment phases of the Year 2000 program. We have substantially completed the
remediation and testing and validation phases of the Year 2000 program, and
expect to complete these phases by the end of November, 1999. We have not and
do not intend to test our USENET news service which is heavily dependent on
external news feeds.

         We have performed a technical review of many of the more critical
third party systems and have surveyed the publicly available statements issued
by the vendors of those systems, in an effort to assess their Year 2000
readiness status. Additionally, we have contacted our significant providers of
third party systems requesting information regarding their vulnerability to
Year 2000 issues and whether the products and services purchased from those
entities are Year 2000 ready. We are evaluating these responses for their
accuracy and adequacy, and are updating appropriate contingency plans for any
material supplier that does not provide an adequate response.

         We have not deferred any specific information technology project due
to the Year 2000 program. We engaged a consulting firm to assist us in
completing the inventory, assessment and testing phases of our Year 2000
program, and to assist us in our Year 2000 program management.

         Costs. As of November 10, 1999, we have incurred expenses of
approximately $600,000 in connection with the implementation of the Year 2000
Program Office and Year 2000 program. We estimate that we will incur minimal
expenses through the remainder of the Year 2000 program. These costs will be
expensed as incurred. The costs and estimates provided include our estimate of
the cost of internal resources directly attributable to the Year 2000 program.
We have funded, and anticipate that we will continue funding, the costs of the
Year 2000 program from cash flows. The estimates for the costs of the Year 2000
program are based upon management's best estimates and may be updated or
revised as additional information becomes available. We currently believe these
costs will not have a material effect on our financial condition, liquidity or
results of operations.

         Risks. Our failure to correct a material Year 2000 problem could
result in an interruption in, or a failure of, normal business activities or
operations. Presently, however, we perceive that our most reasonably likely
worst case scenario related to the Year 2000 is associated with potential
concerns with third party services or products.

         Specifically, we are heavily dependent on a significant number of
third party vendors to provide both network services and equipment. A
significant Year 2000-related disruption of the network services or equipment
provided to us by third party vendors could cause customers to consider seeking
alternate providers or cause an unmanageable burden on customer service and
technical support, which in turn could materially and adversely affect our
results of operations, liquidity and financial condition. We are not presently
aware of any vendor related Year 2000 issue that is likely to result in this
type of disruption.


<PAGE>   20

         Furthermore, our business depends on the continued operation of, and
widespread access to, the Internet. To the extent that the normal operation of
the Internet is disrupted by the Year 2000 issue, our results of operations,
liquidity and financial condition could be materially and adversely affected.

         Contingency Plans. We developed contingency plans for our primary
business operations. We will continue to monitor our third party suppliers and
will adjust any appropriate contingency plans accordingly.

         The estimates and conclusions included in this discussion contain
forward-looking statements and are based on management's best estimates of
future events. Our expectations about risks, future costs and the timely
completion of its Year 2000 modifications may turn out to be incorrect and any
variance from these expectations could cause actual results to differ
materially from what has been discussed above. Factors that could influence
risks, amount of future costs and the effective timing of remediation efforts
include our success in identifying and correcting potential Year 2000 issues
and the ability of third parties to appropriately address their Year 2000
issues. The foregoing Year 2000 discussion and the information contained herein
is provided as a "Year 2000 Readiness Disclosure" as defined in the Year 2000
Information and Readiness Disclosure Act of 1998 (Public Law 105-271, 112 Stat.
2386) enacted on October 19, 1998.




RECENT ACCOUNTING PRONOUNCEMENTS
The FASB has issued Statement No 133, Accounting for Derivative Instruments and
Hedging Activities, which must be adopted by the year 2000. In June 1999, the
FASB issued Statement No. 137, Accounting for Derivative Instruments and
Hedging Activities- Amendment of thE Effective Date of FASB No. 133, which
amends Statement No. 133 to be effective for all fiscal quarters and for all
fiscal years beginning after June 15, 2000 (that is, January 1, 2001 for
companies with calendar-year fiscal years). This statement establishes
accounting and reporting standards for derivative instruments- including
certain derivative instruments embedded in other contracts - and for hedging
activities. Adoption of this statement is not expected to have a material
impact on the Company's financial statements.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We believe our exposure to market rate fluctuations on our investments is
nominal due to the short-term nature of those investments. We have no material
future earnings or cash flow exposures with respect to our outstanding capital
leases, which are all at fixed rates. We have no material earnings or cash flow
exposure with respect to our outstanding convertible notes, which are all at
fixed rates. To the extent MindSpring has borrowings outstanding under the
credit facility, we would have market risk relating to those amounts because
the interest rates under the credit facility are variable. At present, we have
no plans to enter into any hedging arrangements with respect to potential
future borrowings.


<PAGE>   21

PART II  OTHER INFORMATION



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits


         27.  Financial Data Schedule (for SEC use only)


(b)      Reports on Form 8-K

         On September 30, 1999, the Company filed a Current Report on Form 8-K
to report that, on September 22, 1999, the Company had entered into an
Agreement and Plan of Reorganization with Earthlink Network, Inc. (the "Merger
Agreement"). The Merger Agreement sets forth the terms and conditions of the
proposed merger of MindSpring and Earthlink into a new company (the "Merger").

         On October 12, 1999, the Company filed a Current Report on Form 8-K/A
amending its Current Report on Form 8-K dated September 30, 1999. The Form
8-K/A included certain pro forma financial statements with respect to the
Merger.


<PAGE>   22

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

<TABLE>
<S>                                      <C>
                                         MINDSPRING ENTERPRISES, INC.
                                         --------------------------------------------------------
                                         (Registrant)


Date: November 12, 1999                  By: /s/ Michael S. McQuary
                                             ----------------------------------------------------
                                             Michael S. McQuary
                                             President and Chief Operating Officer


Date: November 12, 1999                  By: /s/ Juliet M. Reising
                                             ----------------------------------------------------
                                             Juliet M. Reising
                                             Executive Vice President and Chief Financial Officer
</TABLE>


<PAGE>   23



                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
Exhibit                                                                                    Numbered
-------                                                                                    --------
Number                              Exhibit Description                                      Page
------                                                                                       -----


<S>                                 <C>                                                    <C>
 27.                                Financial Data Schedule (for SEC use only)
</TABLE>