Earthlink 2005 Annual Report Download - page 87

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EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
outstanding share of EarthLink’s common stock for stockholders of record at the close of business on August 5, 2002.
Each right entitles the holder to purchase one one-thousandth (1 ⁄ 1000) of a share (a “Unit”) of EarthLink’s Series D Junior Preferred
Stock at a price of $60.00 per Unit upon certain events. Generally, in the event a person or entity acquires, or initiates a tender offer to acquire,
at least 15% of EarthLink’s then outstanding common stock, the rights will become exercisable for common stock having a value equal to two
times the exercise price of the right, or effectively at one-half of EarthLink’s then-current stock price. The rights are redeemable under certain
circumstances at $0.01 per right and will expire, unless earlier redeemed, on August 6, 2012.
Share Repurchases
During 2002, the Board of Directors approved a share repurchase program (the “Repurchase Program”) and authorized an initial
repurchase of up to $25.0 million of the Company’s common stock. During the years ended December 31, 2003, 2004 and 2005, the Board of
Directors increased the amount authorized to repurchase the Company’s common stock by $125.0 million, $200.0 million and $200.0 million,
respectively, to a total of $550.0 million. During the years ended December 31, 2004 and 2005, the Company approved repurchasing common
stock pursuant to plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. As of December 31, 2005, the Company had
$180.9 million available under the current authorization. The Company may repurchase its common stock from time to time in compliance with
the SEC regulations and other legal requirements, and subject to market conditions and other factors. The Repurchase Program does not require
the Company to acquire any specific number of shares and may be terminated at any time.
The following table summarizes share repurchases during the years ended December 31, 2003, 2004 and 2005 pursuant to the Repurchase
Program, which have been recorded as treasury stock:
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 to a separate authorization by the Board of Directors.
In October 2003, the Company filed a registration statement with the SEC with respect to a rescission offer for approximately 0.2 million
shares of EarthLink common stock in the EarthLink, Inc. 401(k) Plan that were not registered under the Securities Act of 1933. During 2004,
EarthLink completed the rescission offer for the unregistered shares and repurchased approximately 48,000 shares of common stock for
approximately $1.0 million. Approximately $0.4 million of the amounts paid pursuant to the rescission offer was recorded as treasury stock
based on the fair value of common stock acquired on the date the rescission offer expired and the remainder was recorded as expense.
86
Year Ended December 31,
2003
2004
2005
(in thousands)
Number of shares repurchased
5,816
12,628
20,527
Aggregate purchase price
$
37,068
$
125,286
$
192,563