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FORM 10-K
EARTHLINK INC
(Annual Report)
Filed 3/16/2006 For Period Ending 12/31/2005
Address 1375 PEACHTREE STREET SUITE 400
ATLANTA, Georgia 30309
Telephone 404-815-0770
CIK 0001102541
Industry Computer Services
Sector Technology
Fiscal Year 12/31

Table of contents

  • Page 1
    EARTHLINK INC FORM 10-K (Annual Report) Filed 3/16/2006 For Period Ending 12/31/2005 Address Telephone CIK Industry Sector Fiscal Year 1375 PEACHTREE STREET SUITE 400 ATLANTA, Georgia 30309 404-815-0770 0001102541 Computer Services Technology 12/31

  • Page 2
    ...to Commission File Number: 001-15605 EARTHLINK, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware (State of Incorporation) 58-2511877 (I.R.S. Employer Identification No.) 1375 Peachtree St., Atlanta, Georgia 30309 (Address of Principal Executive Offices, Including Zip Code) (404...

  • Page 3
    .... Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions Item 14. Principal Accounting Fees and Services PART IV...

  • Page 4
    ... nationwide Internet access and related value-added services to individual and business customers. Our primary service offerings are narrowband Internet access services, including premium and value-priced access services; broadband or high-speed Internet access services; web hosting; and advertising...

  • Page 5
    ... traditional telephone service, which is available to EarthLink and non-EarthLink high-speed Internet access subscribers and includes enhanced calling features like voicemail, call waiting, caller ID and call forwarding. In late 2005 and early 2006, we introduced EarthLink DSL and Home Phone Service...

  • Page 6
    ..., subscribers can search, organize, shop and communicate-via email, chat or Instant Messaging-all from one convenient location. We also offer premium services such as Internet call waiting, email-by-phone, additional email storage or email addresses, gaming, music downloads and a photo center. We...

  • Page 7
    ... Internet access, including premium and value-priced dial-up access over traditional telephone lines; high-speed or broadband access via DSL, cable, satellite and dedicated circuits; advertising and other value-added services; and web hosting. We began offering IP-based voice services during 2005...

  • Page 8
    ...31, 2005, web hosting revenues were $40.7 million, or 3% of total revenues. VoIP service In October 2005, we began offering EarthLink trueVoice, a competitive alternative to traditional phone service, to EarthLink and nonEarthLink high-speed Internet access subscribers. EarthLink trueVoice uses VoIP...

  • Page 9
    ... help sites and Internet guide files on the EarthLink web site; and • printed reference material. For our PeoplePC Online access services, we provide free email-based customer support and technical assistance seven days a week, 24 hours a day. We also offer free sign-up and software installation...

  • Page 10
    ... email addresses with 100 megabytes of storage space. Fee-based services offered to non-EarthLink subscribers include our Protection Control Center, various security products and EarthLink trueVoice. Network Infrastructure We provide subscribers with Internet access through both EarthLink-managed...

  • Page 11
    ... from our Internet access services to universal service funds used to support local telephone service and advanced telecommunications services for schools, libraries and rural health care facilities. However, we are permitted to bill our customers to recover universal service fees passed through...

  • Page 12
    ... condition of the AOL-Time Warner merger, and after taking over six of Time Warner Cable's markets, Bright House Networks continues to make access available to us. We also offer broadband Internet access over Comcast's cable network to customers in the Seattle and Boston area markets. While the long...

  • Page 13
    ... be able to use other wholesale broadband providers' networks to continue to provide retail broadband services. Such events may cause us to incur additional costs, to pay increased rates for wholesale broadband access services, to increase the retail prices of our broadband service offerings and/or...

  • Page 14
    ... market for Internet access services is likely to continue increasing, and competition impacts the pricing of our services, sales and marketing costs to acquire new subscribers and the number of customers that discontinue using our services, or churn. VoIP services. The market for VoIP services is...

  • Page 15
    ...://www.sec.gov. We also make available free of charge on or through our Internet web site (http://www.earthlink.net) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13...

  • Page 16
    ... manner to meet customer demand in the rapidly evolving market for Internet, wireless and IP-based communications services, including new products and services offered in connection with our voice and municipal broadband network initiatives. The market for Internet and telecommunications services is...

  • Page 17
    ..., technical, marketing and other resources than we have. We compete directly or indirectly with the following categories of companies: • established online services companies, such as Time Warner (AOL) and the Microsoft Network (MSN); • local and regional ISPs; • free or value-priced ISPs such...

  • Page 18
    ... the development, promotion and sale of advertising services. The companies we compete with for Internet access subscribers also compete with us for subscribers to value-added services, such as email storage and security products. In certain cases, companies offer value-added services for free, and...

  • Page 19
    ... our broadband customer base between retail and wholesale customers; • changes in the number of hours users use our access services; • the amount of marketing expenditures we incur, including fluctuations in payments to marketers of our services for adding paying subscribers to our customer base...

  • Page 20
    ... to successfully integrate them into our business; • our ability to develop an infrastructure to support and timely launch service offerings based on new technologies, such as VoIP, municipal wireless broadband or other advanced services we may offer in the future; • fluctuations and impairments...

  • Page 21
    ... service costs such as telecommunications and customer support costs as well as costs incurred to add new broadband customers, such as sales and marketing and installation and hardware costs. While we continuously evaluate cost reduction opportunities associated with the delivery of broadband access...

  • Page 22
    directly connected to homes and businesses. We have agreements with several network providers that allow us to use the last mile element of their network to provide high-speed Internet access services via DSL or cable. The availability of and charges for access with any of our network providers at ...

  • Page 23
    ... competitive alternatives to DSL and cable for delivering broadband Internet access services, reflected in our municipal wireless initiative. In October 2005, Wireless Philadelphia selected us to develop and implement a citywide wireless broadband network and offer high-speed public Internet access...

  • Page 24
    ... electronic equipment. These technology centers host and manage Internet content, email, web hosting and authentication applications and services. Despite precautions taken by us and our third-party network providers, over which we have no control, a natural disaster or other unanticipated problem...

  • Page 25
    ...a commercially reasonable cost, or at all. We may experience increases in our telecommunications usage that exceed our available telecommunications capacity. As a result, users may be unable to register or log on to use our services, may experience a general slow-down in their Internet connection or...

  • Page 26
    ... had an adverse effect on our ability to market and sell and support our Internet access services. As we expand our business and develop new technologies, products and services, we may become increasingly subject to intellectual property infringement claims. Such claims, whether or not meritorious...

  • Page 27
    ... offering new products and services to maintain and increase our customer base. Such expansion increases the complexity of our business and places a significant strain on our management, operations, financial resources, and internal financial control and reporting functions. Our current and planned...

  • Page 28
    ... square footage of approximately 23,000 feet. Our technology centers host and manage Internet content, email, web hosting and authentication applications and services. We may acquire additional amounts of storage and processing capacity in relatively small increments and, consequently, we 27

  • Page 29
    ...8.69 9.98 $ 8.11 8.32 8.65 10.07 $ 9.76 The last reported sale price of EarthLink's common stock on the Nasdaq National Market on February 28, 2006 was $9.92 per share. Holders There were approximately 1,923 holders of record of EarthLink's common stock on February 28, 2006. Dividends We have never...

  • Page 30
    ... Annual Report on Form 10-K. Such information is incorporated herein by reference. Issuer Purchases of Equity Securities The number of shares repurchased and the average price paid per share for each month in the three months ended December 31, 2005 were as follows: Total Number 2005 Total Number...

  • Page 31
    ... in this Annual Report on Form 10-K. 2001 Year Ended December 31, 2002 2003 2004 (in thousands, except per share amounts) 2005 Statement of operations data: Revenues Operating costs and expenses Income (loss) from operations Net income (loss) Deductions for accretion dividends(1) Net income (loss...

  • Page 32
    ... construct and deploy municipal wireless broadband networks; (13) that our third-party network providers may be unwilling or unable to provide Internet, wireline and wireless telecommunications access; (14) that our third-party providers for technical and customer support and billing services may be...

  • Page 33
    ... their cost of Internet access. Broadband, or high-speed, access is typically priced at $20 to $50 per month and is growing, having added an estimated nine million households in 2005 to an estimated total of 38 million households at the end of 2005, equaling the number of households with dial-up...

  • Page 34
    ...EarthLink provides all three types of Internet access services described above (traditional, fully-featured narrowband access; value-priced narrowband access; and broadband access), web hosting services and advertising and other value-added services, such as mail storage and security. Our subscriber...

  • Page 35
    ... service costs such as telecommunications and customer support costs as well as costs incurred to add new broadband customers, such as sales and marketing and installation and hardware costs. While we continuously evaluate cost reduction opportunities associated with the delivery of broadband access...

  • Page 36
    ... Broadband Access We have an agreement with Time Warner Cable and Bright House Networks, companies whose networks pass more than 19 million homes, to offer our broadband Internet access services over their systems. In connection with the agreement, Time Warner Cable and Bright House Networks receive...

  • Page 37
    ...new service, which uses Covad line-powered voice access, allows us to offer consumers low-cost phone services along with high-speed Internet access. We have committed to provide sales and marketing support for the trial. We are in the process of evaluating the infrastructure and various applications...

  • Page 38
    ...high-speed ISP for Sprint's local residential and small business customers. In addition, we provide Sprint with wholesale narrowband access services. The contracts associated with these arrangements expire in 2007. During the years ended December 31, 2003, 2004 and 2005, our relationship with Sprint...

  • Page 39
    ... per user (subscriber). Narrowband service ARPU is computed by dividing average monthly service revenue for the period by the average number of subscribers for the period. Service revenue includes monthly fees charged to customers for dial-up and wireless Internet access and excludes equipment and...

  • Page 40
    ...: Revenues: Narrowband access Broadband access Web hosting Advertising and other value-added services Total revenues Operating costs and expenses: Telecommunications service and equipment costs Sales incentives Total cost of revenues Sales and marketing Operations and customer support General and...

  • Page 41
    ... increased use of promotional pricing for our service offerings. Equipment and related revenues decreased during the year ended December 31, 2004 due to EarthLink's decisions in 2003 to discontinue the sale of personal computers bundled with prepaid, value-priced narrowband Internet access services...

  • Page 42
    ... above the rate experienced in 2005, our narrowband subscriber base may decrease at an accelerated rate which would adversely affect our business. Broadband access revenues Broadband access revenues consist of fees charged for high-speed, high-capacity access services including DSL, cable, satellite...

  • Page 43
    ... the mix of our broadband subscriber base from retail DSL subscribers to retail cable and EarthLink Experience customers. EarthLink Experience customers have a lower monthly rate because they purchase EarthLink services and applications but purchase Internet access from other ISPs. The shift in the...

  • Page 44
    ... electronic publications, including the Personal Start Page TM ; and referring our customers to our partners' products and services. Advertising and other value-added services revenues also include certain ancillary services sold as add-on features to our Internet services, such as email storage and...

  • Page 45
    ... and equipment costs are the primary component of EarthLink's cost of revenues and consist of telecommunications fees, set-up fees, network equipment costs incurred to provide our Internet access services and depreciation of our network equipment. Telecommunications service and equipment costs also...

  • Page 46
    ... voice services and wireless broadband services. Operations and customer support Operations and customer support expenses consist of costs associated with technical support and customer service, providing our subscribers with toll-free access to our technical support and customer service centers...

  • Page 47
    ...to 2005 due to identifiable definite life intangible assets resulting from the acquisitions of Aluria and New Edge. Facility exit and restructuring costs 2003 costs. During the first quarter of 2003, we executed a plan to streamline our contact center facilities (the "2003 Plan"). In connection with...

  • Page 48
    ...increased our estimate for real estate commitments associated with the 2004 Plan by $0.7 million, primarily associated with estimates of operating expenses for various facilities. As a result of the 2005 Plans and the subsequent changes in estimates to the liabilities recorded for our contact center...

  • Page 49
    ... Seattle, Washington. The closure of the four contact centers resulted in the termination of 1,220 employees and a net reduction of 920 employees, primarily customer support personnel. Under the 2004 Plan, EarthLink closed contact center operations in Harrisburg, Pennsylvania; Roseville, California...

  • Page 50
    ...and 2005, including changes during the period attributable to costs incurred and charged to expense, costs paid or otherwise settled and adjustments to the liabilities: Facility Exit Costs Severance and personnel-related costs Real estate and telecommunications costs, including non-cancelable leases...

  • Page 51
    ... the year ended December 31, 2005, we saw continued declines in telecommunications service and equipment costs and operating costs; however, these declines were offset by a decrease in revenues and an increase in cash used for working capital, which caused net cash provided by operating activities...

  • Page 52
    ... 2014. 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 that expire at various dates through 2008. During the year ended December 31, 2005, we extended...

  • Page 53
    ... marketing costs to add customers that will generate recurring revenues. Additionally, we also expect to continue to use cash to acquire and retain new and existing subscribers. Capital expenditures are expected to increase in 2006 as we invest in our initiatives for wireless broadband services and...

  • Page 54
    ... in which we are able to offer our IP-based voice services, such as our EarthLink DSL and Home Phone Services. We will also use cash to continue to pay real estate obligations associated with facilities closed in restructuring our contact center operations. Due to our expected cash requirements...

  • Page 55
    ..., accounting, tax, billing, procurement, risk management, payroll, human resource, employee benefit administration and other support services in exchange for management fees. We believe that providing these services to HELIO enables HELIO to more quickly and cost effectively launch its business than...

  • Page 56
    ...affect net income (loss). Sales incentives. We have marketing arrangements with a number of leading hardware and software manufacturers to include our Internet access software pre-installed on or included with their products. We also market our products and services through retailers. We pay fees to...

  • Page 57
    ... would not generally affect net income (loss). Allowance for doubtful accounts We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make payments. With respect to receivables due from consumers, our policy is to specifically reserve...

  • Page 58
    ... the carrying amount may not be recoverable. Our tests involve critical estimates reflecting management's best assumptions and estimates related to, among other factors, subscriber additions, churn, prices, marketing spending, operating costs and capital spending. Significant judgment is involved in...

  • Page 59
    ... 123 (R) requires that compensation cost relating to all share-based payment transactions, including grants of employee stock options, be recognized in the statement of operations based on their fair values. Pro forma disclosure is no longer an alternative. In April 2005, the Securities and Exchange...

  • Page 60
    ..., we accounted for share-based payments to employees using APB Opinion No. 25's intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. Accordingly, the adoption of SFAS No. 123 (R)'s fair value method will adversely impact our reported results of...

  • Page 61
    ...time maximizing the income we receive from our investments without significantly increasing risk. Some of the securities that we have invested in may be subject to market risk. This means that a change in prevailing interest rates may cause the fair value of the investments to fluctuate. For example...

  • Page 62
    ... STATEMENTS Page Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2004 and 2005 Consolidated Statements of Operations for the years ended December 31, 2003, 2004 and 2005 Consolidated Statements of Stockholders' Equity and Comprehensive Income...

  • Page 63
    ... audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of EarthLink, Inc.'s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the...

  • Page 64
    ..., in our opinion, EarthLink, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005 based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the...

  • Page 65
    ... per share data) December 31, 2004 2005 ASSETS Current assets: Cash and cash equivalents Investments in marketable securities Accounts receivable, net of allowance of $7,903 and $8,054 as of December 31, 2004 and 2005, respectively Due from HELIO Prepaid expenses Other current assets Total current...

  • Page 66
    ...per share data) Revenues: Narrowband access Broadband access Web hosting Advertising and other value-added services Total revenues Operating costs and expenses: Telecommunications service and equipment costs Sales incentives Total cost of revenues Sales and marketing Operations and customer support...

  • Page 67
    ..., net Amortization of deferred compensation - - - - - Stock-based compensation expense - - - - 366 Repurchase of common stock - - - - - Expiration of warrants - - - - 964 Unrealized holding losses on certain investments Net income - - - - - Total comprehensive income Balance as of December 31, 2005...

  • Page 68
    ... received from investments in other companies Net cash provided by (used in) investing activities Cash flows from financing activities: Principal payments under capital lease obligations Proceeds from stock options exercised, employee stock purchase plan purchases and issuances of phantom share...

  • Page 69
    ...fees, usage fees early termination fees and revenues associated with the activation and sale of Internet appliances used to obtain Internet access services. Broadband access revenues consist of fees charged for high-speed, highcapacity access services including digital subscriber line ("DSL"), cable...

  • Page 70
    ... of services; and depreciation of network equipment. Sales incentives include the cost of promotional products and services provided to potential and new subscribers, including free Internet access on a trial basis and free modems and other hardware. EarthLink accounts for sales incentives...

  • Page 71
    ... to trade receivables is limited due to the large number of customers comprising the Company's customer base. As of December 31, 2004 and 2005, two companies each accounted for more than 10% of gross accounts receivable. Regulatory Risk. EarthLink purchases broadband access from incumbent local...

  • Page 72
    ... December 31, 2003, 2004 and 2005, EarthLink incurred various shipping charges in connection with providing welcome kits to new customers and shipping equipment. The Company classifies shipping and handling charges associated with welcome kits as sales and marketing expenses, which were $2.6 million...

  • Page 73
    ... average closing price of the Company's common stock during the period, outstanding shares of Series A and Series B convertible preferred stock on an as converted basis and restricted stock units. Stock-Based Compensation As of December 31, 2005, EarthLink had various stock-based compensation plans...

  • Page 74
    ... 2004 2005 (in thousands, except per share data) Net income (loss) attributable to common stockholders, as reported Add: Stock-based compensation expense associated with stock options included in reported net income (loss) Deduct: Stock-based compensation expense determined using a fair value based...

  • Page 75
    ...including auction rate debt securities), corporate notes and commercial paper, all of which bear a minimum short-term rating of A1/P1 or a minimum long-term rating of A/A2. The Company has classified all short- and long-term investments in marketable securities as available-for-sale. The Company may...

  • Page 76
    ... economic environment. If the financial condition of EarthLink's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. With respect to receivables due from consumers, the Company's policy is to specifically reserve for all...

  • Page 77
    ... stated at cost less accumulated depreciation. Depreciation expense is determined using the straight-line method over the estimated useful lives of the various asset classes, which are generally three to five years for computers, telecommunications equipment and furniture and other office equipment...

  • Page 78
    ..., software and technology and other assets acquired in conjunction with the purchases of businesses and subscriber bases from other ISPs. Subscriber bases acquired directly are valued at cost plus assumed service liabilities, which approximates fair value at the time of purchase. When management...

  • Page 79
    ... 123 (R) requires that compensation cost relating to all share-based payment transactions, including grants of employee stock options, be recognized in the statement of operations based on their fair values. Pro forma disclosure is no longer an alternative. In April 2005, the Securities and Exchange...

  • Page 80
    ...Company accounted for share-based payments to employees using APB Opinion No. 25's intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. Accordingly, the adoption of SFAS No. 123 (R)'s fair value method will adversely impact the Company's reported...

  • Page 81
    ... to acquire New Edge Holding Company ("New Edge"), a single-source national provider of secure multi-site managed data networks and dedicated Internet access for businesses and communications carriers. Under the terms of the merger agreement, EarthLink will acquire 100% of New Edge in a merger...

  • Page 82
    ..., respectively, due to the realization of tax benefits associated with net operating loss carryforwards which were acquired in connection with the acquisitions of OneMain.com, Inc., PeoplePC Inc. ("PeoplePC") and Cidco Incorporated. During the year ended December 31, 2005, goodwill increased 81

  • Page 83
    ... of businesses and subscriber bases from other ISPs that are not deemed to have indefinite lives. Definite life intangible assets are amortized on a straight-line basis over their estimated useful lives, which are generally three years for subscriber bases and one to six years for acquired software...

  • Page 84
    ...827 90,045 28,489 9,464 248,825 Amortized Cost Short-term Government agency notes Asset-backed (including auction rate) securities Corporate notes Commercial paper Long-term Government agency notes Asset-backed securities Corporate notes Total Government agency notes Asset-backed (including auction...

  • Page 85
    ... between the book value and fair value of definite-lived non-cash assets contributed to HELIO over the estimated useful lives of the definite-lived non-cash assets contributed. The amortization increases the carrying value of the Company's investment and decreases the net losses of equity affiliate...

  • Page 86
    ... of December 31, 2004 and 2005: As of December 31, 2004 2005 (in thousands) Accrued communications costs Accrued advertising Accrued taxes Accrued bounties Liabilities associated with non-cancelable operating leases Accrued outsourced customer support Subscriber base and fixed asset purchases Other...

  • Page 87
    ... 2004 2005 (in thousands) Number of shares repurchased Aggregate purchase price 5,816 $ 37,068 12,628 $ 125,286 20,527 $ 192,563 In April 2003, the Company repurchased 9.0 million shares of its common stock from Sprint Nextel Corporation ("Sprint") for $53.1 million, which was executed pursuant...

  • Page 88
    ... 2004 and 2005. 11. Stock Compensation Plans and Warrants Stock Incentive Plans The Company has granted options to purchase the Company's common stock to employees and directors under various stock incentive plans. Under the plans, employees and non-employee directors are eligible to receive awards...

  • Page 89
    EARTHLINK, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) As of December 31, 2005, the Company had reserved 23.6 million shares of common stock for the issuance of equity-based incentive compensation under its stock incentive plans. Approximately 7.4 million outstanding options were ...

  • Page 90
    ... of the Company's stock options and warrants as of December 31, 2005: Stock Options and Warrants Outstanding Weighted Average Remaining Number Contractual Outstanding Life (in thousands) Stock Options and Warrants Exercisable Weighted Average Exercise Price Weighted Average Exercise Price Range of...

  • Page 91
    ... Purchase Plan In January 2005, the Company terminated its employee stock purchase plan ("ESPP"). Under the terms of the ESPP, eligible employees were able to have up to 15% of eligible compensation deducted from their pay to purchase EarthLink common stock. Under the ESPP, withholdings were used to...

  • Page 92
    ... at statutory rate State income taxes, net of federal benefit Nondeductible expenses Net change to valuation allowance Change in valuation allowance associated with realized deferred tax assets Valuation allowance for realized deferred tax assets acquired in business combinations Increase in...

  • Page 93
    ... annual escalation provisions as well as renewal options. The total amount of base rent payments, net of allowances and incentives, is being charged to expense using the straight-line method over the terms of the leases. In addition to the base rent payments, EarthLink generally pays a monthly...

  • Page 94
    ... in bulk at a discount, and providing access to EarthLink's customer base. Certain amounts payable as of December 31, 2004 and 2005 under such agreements are included in accrued communications costs in Note 8. Minimum commitments under non-cancelable network service agreements and other purchase...

  • Page 95
    ... and investments in publicly-traded and privately-held entities. The following table summarizes the amortized costs and fair values of EarthLink's cash equivalents and short- and long-term investments in marketable securities by security type as of December 31, 2004 and 2005. As of December...

  • Page 96
    ... associated with marketing HELIO's services. EarthLink purchases wireless Internet access devices and services from HELIO. During the year ended December 31, 2005, fees paid for products and services received from HELIO were $0.9 million. As of December 31, 2005, the Company had accounts receivable...

  • Page 97
    ... 31, 2004, the Company paid Boingo $0.8 million pursuant to various arrangements, including a software license, maintenance and network access agreement and a revenue sharing arrangement. The amounts paid to and received from Boingo during the years ended December 31, 2003 and 2005 were less than...

  • Page 98
    ... to management, including EarthLink's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate...

  • Page 99
    ..." and "Executive Compensation-Certain Relationships and Related Transactions" in our Proxy Statement referred to in Item 10 above or in a subsequent amendment to this Annual Report on Form 10-K. Such information is incorporated herein by reference. Item 14. Principal Accounting Fees and Services...

  • Page 100
    ...Listing of Exhibits 2.1- Agreement and Plan of Merger, dated December 12, 2005, by and among EarthLink, Inc., New Edge Holding Company and New Edge Merger Corporation (incorporated by reference to Exhibit 2.1 to EarthLink, Inc.'s Report on Form 8-K dated December 12, 2005-File No. 001-15605). Second...

  • Page 101
    ... 10.3 of EarthLink, Inc.'s Report on Form 8-K dated February 17, 2006-File No. 00115605). 1995 Stock Option Plan (incorporated by reference to Exhibit 4.4 of EarthLink, Inc.'s Registration Statement on Form S-8-File No. 333-30024). MindSpring Enterprises, Inc. 1995 Stock Option Plan, as amended...

  • Page 102
    ... 27, 2005, between EarthLink, Inc. and Charles G. Betty, President and Chief Executive Officer of EarthLink, Inc. (incorporated by reference to Exhibit 10.1 of EarthLink, Inc.'s Report of Form 8-K dated October 27, 2005-File No. 001-15605). EarthLink, Inc. Board of Directors Compensation Plan, dated...

  • Page 103
    ... 24.1*- 31.1*- 31.2*- 32.1*- 32.2*- * # (b) (c) Filed herewith. Consent of Ernst & Young LLP, an independent registered public accounting firm. Power of Attorney (see the Power of Attorney in the signature page hereto). Certification of Chief Executive Officer pursuant to Securities Exchange Act...

  • Page 104
    ...of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EARTHLINK, INC. By: /s/ CHARLES G. BETTY Charles G. Betty, Chief Executive Officer Date: March 16, 2006 Each person whose signature appears below hereby constitutes and appoints...

  • Page 105
    ...10.9#- 10.10#- Agreement and Plan of Merger, dated December 12, 2005, by and among EarthLink, Inc., New Edge Holding Company and New Edge Merger Corporation (incorporated by reference to Exhibit 2.1 to EarthLink, Inc.'s Report on Form 8-K dated December 12, 2005-File No. 00115605). Second Restated...

  • Page 106
    ... WHMNY Real Estate Limited Partnership and EarthLink, Inc. Dated September 19, 2005 (incorporated by reference to Exhibit 10.1 of EarthLink, Inc.'s Report on Form 8-K dated October 14, 2005-File No. 001-15605). Contribution and Formation Agreement Among SK Telecom International, Inc., SK Telecom Co...

  • Page 107
    ... 27, 2005, between EarthLink, Inc. and Charles G. Betty, President and Chief Executive Officer of EarthLink, Inc. (incorporated by reference to Exhibit 10.1 of EarthLink, Inc.'s Report of Form 8-K dated October 27, 2005-File No. 001-15605). EarthLink, Inc. Board of Directors Compensation Plan, dated...

  • Page 108
    Exhibit 21.1 Subsidiaries of EarthLink, Inc. Name Jurisdiction of Incorporation EarthLink/OneMain, Inc. PeoplePC Inc. Cidco Incorporated Delaware Delaware Delaware

  • Page 109
    ... assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of EarthLink, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2005. /s/ Ernst & Young LLP Atlanta, Georgia March 15, 2006

  • Page 110
    ..., the Chief Executive Officer of EarthLink, Inc., certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2005 of EarthLink, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact...

  • Page 111
    ... Officer of EarthLink, Inc., certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2005 of EarthLink, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make...

  • Page 112
    ... OF 2002 In connection with the Annual Report on Form 10-K of EarthLink, Inc. (the "Company") for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Charles G. Betty, Chief Executive Officer of the Company, certify, pursuant to...

  • Page 113
    ... OF 2002 In connection with the Annual Report on Form 10-K of EarthLink, Inc. (the "Company") for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin M. Dotts, Chief Financial Officer of the Company, certify, pursuant to...