Earthlink 2005 Annual Report Download - page 93

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EARTHLINK, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
credited directly to equity. As of December 31, 2005, the NOLs included $48.2 million of NOLs acquired in connection with business
acquisitions. Any benefit resulting from the utilization of this portion of the NOLs will be credited to goodwill.
The Company has provided a valuation allowance for its deferred tax assets, including NOLs, because of uncertainty regarding their
realization.
13. Commitments and Contingencies
Leases
The Company leases certain of its facilities and equipment under non-cancelable operating leases expiring in various years through 2014.
The leases generally contain 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 allocation of the buildings’ operating expenses. Total base rent expense in the years ended December 31,
2003, 2004 and 2005 for all operating leases amounted to $26.2 million, $17.8 million and $13.1 million, respectively.
Minimum lease commitments under non-cancelable leases, including estimated operating expenses, as of December 31, 2005 are as
follows:
During the year ended December 31, 2005, the Company extended the term of its lease for its facilities located in Pasadena, California for
an additional seven years, from 2007 to 2014. The extension of the lease term increased the Company’s aggregate future minimum lease
commitment for the facility by $17.1 million, including estimated costs for facility expenses such as property taxes, maintenance and utility
costs.
92
Operating
Leases
Year Ending December 31,
(in thousands)
2006
$
18,537
2007
14,375
2008
8,580
2009
9,807
2010
9,244
Thereafter
36,740
Total minimum lease payments, including estimated operating expenses
97,283
Less aggregate contracted sublease income
(12,984
)
$
84,299