Earthlink 2005 Annual Report Download - page 97

EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Officers and Directors
As of December 31, 2001, the Company had made equity investments totaling $10.0 million in EVG, an affiliate of eCompanies, LLC
(“eCompanies”). The carrying value of the investment in EVG as of December 31, 2004 and 2005 was $0.6 million and zero, respectively. Sky
Dayton, a member of EarthLink’s Board of Directors, is a founding partner in EVG, a limited partnership formed to invest in domestic
emerging Internet-related companies, and a founder and director of eCompanies. The Company recorded an adjustment of $0.2 million during
the year ended December 31, 2003 to write its investment in EVG down to its estimated realizable value. During the year ended December 31,
2005, the Company received $4.4 million in cash distributions from EVG.
During the year ended December 31, 2002, the Company entered into 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 sharing arrangement. The amounts paid to and received from Boingo during the years ended
December 31, 2003 and 2005 were less than $0.1 million.
18. Subsequent Event (Unaudited)
On March 15, 2006, the Company entered into an agreement with Covad Communications Group, Inc. (“Covad’’) to purchase
$10.0 million of Covad’s common stock and $40.0 million of Covad’s Senior Secured Convertible Notes to fund Covad’s network build-outs
for line-powered, IP-based voice services.
19. Quarterly Financial Data (Unaudited)
The following table sets forth certain unaudited quarterly consolidated financial data for the eight quarters in the period ended
December 31, 2005. In the opinion of the Company’s management, this unaudited information has been prepared on the same basis as the
audited consolidated financial statements and includes all material adjustments (consisting of normal recurring accruals and adjustments)
necessary to present fairly the quarterly unaudited financial information. The operating results for any quarter are not necessarily indicative of
results for any future period.
(1)
Because of the method used in calculating per share data, the quarterly net income (loss) per share amounts will not necessarily add to the net income per share computed for
the year.
96
Three Months Ended
Mar. 31,
June 30,
Sept. 30,
Dec. 31,
Mar. 31,
June 30,
Sept. 30,
Dec. 31,
2004
2004
2004
2004
2005
2005
2005
2005
(unaudited)
(in thousands, except per share data)
Revenues
$
351,563
$
348,587
$
343,974
$
338,078
$
334,740
$
325,688
$
316,996
$
312,648
Operating costs and expenses
364,392
300,006
306,144
300,902
297,940
277,835
273,968
275,833
Income (loss) from operations
(12,829
)
48,581
37,830
37,176
36,800
47,853
43,028
36,815
Gain (loss) on investments in other
companies, net
—
—
(
726
)
(694
)
(915
)
3,352
—
440
Net losses of equity affiliate
—
—
—
—
(
257
)
(2,085
)
(4,592
)
(8,674
)
Interest income and other, net
1,035
1,711
1,584
1,801
2,875
2,936
3,400
4,280
Income (loss) before income taxes
(11,794
)
50,292
38,688
38,283
38,503
52,056
41,836
32,861
Provision for income taxes
—
630
1,136
2,694
5,156
8,208
5,401
3,711
Net income (loss)
$
(11,794
)
$
49,662
$
37,552
$
35,589
$
33,347
$
43,848
$
36,435
$
29,150
Basic net income (loss) per share (1)
$
(0.07
)
$
0.32
$
0.25
$
0.24
$
0.23
$
0.32
$
0.28
$
0.22
Diluted net income (loss) per share (1)
$
(0.07
)
$
0.31
$
0.24
$
0.23
$
0.22
$
0.31
$
0.27
$
0.22
Basic weighted average common shares
outstanding
158,325
156,483
152,970
149,233
146,594
138,303
132,444
131,008
Diluted weighted average common shares
outstanding
158,325
159,680
156,056
153,665
149,425
140,867
134,709
134,687