Earthlink 2005 Annual Report Download - page 55

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Related Party Transactions
HELIO
EarthLink and HELIO have entered into a services agreement pursuant to which we provide HELIO facilities, 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 if it were to purchase these services from third parties. The management fees were determined based on our costs to provide the services,
and management believes such fees are reasonable. The total amount of fees that HELIO will pay to us will depend on the extent to which
HELIO utilizes our services. Fees for services provided to HELIO are reflected as reductions to the associated expenses incurred by us to
provide such services. During the year ended December 31, 2005, fees received for services provided to HELIO were $3.0 million.
We market HELIO’s products and services, and during the year ended December 31, 2005, we generated revenues of $0.3 million
associated with marketing HELIO’s services.
We purchase 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, we had accounts receivable from HELIO of approximately $0.3 million.
Sprint
Through its ownership interest in us, Sprint was considered a related party during the years ended December 31, 2003 and 2004. Due to
sales of shares of our common stock during the year ended December 31, 2005, Sprint is no longer considered a related party. Our marketing
relationship with Sprint generated approximately 10% of our total gross organic subscriber additions during the years ended December 31,
2003 and 2004. In connection with our marketing relationship with Sprint, we provide wholesale broadband, narrowband and other services to
Sprint. We received approximately $27.3 million and $27.6 million during the years ended December 31, 2003 and 2004, respectively, for
these services. The prices for services provided by us to Sprint were negotiated at arms-length. As of December 31, 2004, we had accounts
receivable related to these arrangements with Sprint of $6.0 million.
Sprint is one of our principal telecommunications service providers. We paid Sprint approximately $74.0 million and $57.6 million during
the years ended December 31, 2003 and 2004, respectively, associated with network and voice services agreements. The prices paid for
services purchased from Sprint were negotiated at arms-length. The aggregate amount due to Sprint pursuant to these service agreements was
$6.0 million as of December 31, 2004.
Officers and Directors
Our investments in other companies include an investment in EVG, a limited partnership formed to invest in domestic emerging Internet-
related companies. Sky Dayton, a member of our Board of Directors, is a founding partner in EVG. EVG also has an affiliation with
eCompanies. Sky Dayton is a founder and director of eCompanies. During the year ended December 31, 2005, we received $4.4 million in cash
distributions from EVG.
We have a commercial arrangement with Boingo Wireless, Inc. (“Boingo”). Sky Dayton, a member of EarthLink’s Board of Directors, is
the founder and the former Chief Executive Officer of Boingo. During the year ended December 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
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