Earthlink 2003 Annual Report Download - page 31

Financing activities used cash of $10.1 million. Proceeds from the exercise of stock options and warrants were $8.0 million, and we
financed the acquisition of data processing and office equipment amounting to $0.9 million through equipment leases and sale-leaseback
agreements. Principal payments on capital lease agreements were $19.0 million.
Contractual Obligations and Commitments
At December 31, 2003, we had the following contractual commitments:
We lease certain facilities and certain equipment under non-cancelable operating leases expiring in various years through 2011. We also
lease equipment, primarily data communications equipment, under non-cancelable capital leases. Most of our capital leases include purchase
options at the end of the lease term.
Access to the Internet for customers outside of our base of owned POPs is provided through capacity leased from a number of third-party
providers under non-cancelable network service agreements expiring in various years through 2008.
Other
At December 31, 2003, we had approximately $349.7 million in cash and cash equivalents. In addition, we held short- and long-term
investments in marketable securities valued at $89.1 million and $49.0 million, respectively. Short-term investments in marketable securities
consist of investments that have maturity dates of up to one year from the balance sheet date, and long-term investments in marketable
securities consist of investments that have maturity dates of more than one year from the balance sheet date. We believe our available cash and
marketable securities, together with our results of operations, are sufficient to meet our operating expenses and capital requirements for the
foreseeable future. Our capital requirements depend on numerous factors, including the rate of market acceptance of our services, our ability to
maintain and expand our customer base, the rate of expansion of our network infrastructure, the size and types of acquisitions in which we may
engage, the level of resources required to expand our marketing and sales programs, and general economic developments. We may use a
portion of our cash to acquire companies with specific products, service capabilities, marketing channels, and/or subscriber bases that
complement ours, and we may use cash to repurchase shares of our common stock.
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We will also use cash to execute our plans to restructure our contact center operations in the first quarter of 2004, including payments for
employee and personnel related costs and real estate obligations. We have no commitments for any additional financing and have no lines of
credit or similar sources of financing, and we cannot be sure that we can obtain additional commitments on favorable terms, if at all. Additional
equity financing may dilute our stockholders, and debt financing, if available, may restrict our ability to declare and pay dividends and raise
future capital. If we are unable to obtain additional needed financing, we may be required to reduce the scope of operations or anticipated
expansion, which could materially and adversely affect us.
Share repurchase program
During 2003, the Board of Directors increased the amount authorized to repurchase our common stock under our share repurchase
program by $125.0 million to a total of $150.0 million. As of February, 27, 2004, we have utilized approximately $69.5 million pursuant to the
authorizations and have $80.5 million available under the current authorization. We may repurchase our common stock from time to time in
compliance with the Securities and Exchange Commission's regulations and other legal requirements, and subject to market conditions and
other factors. The share repurchase program does not require us to acquire any specific number of shares and may be terminated at any time.
During 2003, we also purchased 9.0 million shares of our common stock from Sprint for $53.1 million pursuant to a separate authorization
by the Board of Directors.
Payments due by Period
Total Less than 1 year 1-2 years 2-3 years More than 3 years
(in millions)
Capital lease obligations (non
-
discounted)
$
0.9
$
0.9
$
—
$
—
$
—
Non
-cancelable operating leases, net of
subleases
86.9
26.3
20.3
17.1
23.2
Non
-
cancelable network service agreements
137.7
117.5
16.5
2.6
1.1
$
225.5
$
144.7
$
36.8
$
19.7
$
24.3