Earthlink 2005 Annual Report Download - page 75

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EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The weighted average grant date fair value of options granted during the years ended December 31, 2003, 2004 and 2005 was $4.34, $4.71
and $4.65, respectively.
Comprehensive Income (Loss)
Comprehensive income (loss) as presented in the Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)
includes unrealized gains and losses which are excluded from the Consolidated Statements of Operations in accordance with SFAS No. 130,
“Reporting Comprehensive Income.” For the years ended December 31, 2003, 2004 and 2005, these amounts included changes in unrealized
gains and losses on certain investments classified as available-for-sale. The amounts are presented net of tax-
related effects, which management
estimated to be approximately zero.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less at the date of acquisition are considered cash equivalents.
These investments primarily consist of money market funds and commercial paper.
Investments in Marketable Securities
Investments in marketable securities are accounted for in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt
and Equity Securities.” All investments with original maturities greater than 90 days and with maturities less than one year from the balance
sheet date are considered short-term investments. Short-term investments also include investments in asset-backed, auction rate debt securities
with interest rate reset periods of 90 days or less but whose underlying agreements have original maturities of more than 90 days, based on the
provisions of Accounting Research Bulletin No. 43, Chapter 3A, Working Capital-
Current Assets and Liabilities, which allows classification of
investments based on management’s view. Investments with original maturities greater than 90 days and with maturities greater than one year
from the balance sheet date, excluding investments in asset-
backed, auction rate debt securities with interest reset periods of 90 days or less, are
considered long-term investments. The Company has invested in government agency notes, asset-backed debt securities (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 or may
not hold its investments in marketable securities until maturity. In response to changes in the availability of and the yield on alternative
investments as well as liquidity requirements, the Company occasionally sells its investments in marketable securities prior to their stated
maturities. Available-for-sale securities are carried at fair value, with any unrealized gains and losses, net of tax, included in unrealized gains
(losses) on investments as a separate component of stockholders’ equity and in total comprehensive income (loss). Realized gains and losses
are included in interest income and other, net, in the Consolidated Statements of Operations and are determined on a specific identification
basis.
Allowance for Doubtful Accounts
EarthLink maintains an allowance for doubtful accounts for estimated losses resulting from the inability of EarthLink’
s customers to make
payments. In assessing the adequacy of the allowance for
74