Earthlink 2001 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2001 Earthlink annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 58

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58

F-27
Significant Agreements
Access to the Internet for customers outside of the Company's base of owned POPs is provided through capacity leased from a number of
third party providers such as UUNET, Level 3 and Sprint, among others. EarthLink is, in effect, buying this capacity in bulk at a discount, and
providing access to EarthLink's customer base at EarthLink's normal rates. Amounts payable under such agreements are included under
"Accrued Communications Costs" in note 6.
Minimum commitments under non-cancelable network service agreements are as follows:
Cost of revenue from these non-
cancelable network service agreements totaled $150.7 million, $323.9 million and $449.5 million in 1999,
2000 and 2001, respectively.
The Company licenses significant applications for distribution including Netscape Communicator, (this license automatically renews each
year for additional one
-year terms unless either party terminates the license on 120 days notice), Microsoft Internet Explorer (this license
automatically renews for additional one-year terms, although either party may terminate the license at any time on 30 days notice), and
MacTCP software from Apple (this license renews each year). The Company has an agreement with America Online (AOL) under which it
distributes a co-branded EarthLink version of AOL Instant Messenger.
14. Profit Sharing Plans
In January 2001, the Company consolidated the legacy 401(k) savings plans of EarthLink Network and MindSpring into one
EarthLink Inc. 401(k) Savings Plan (the "Plan"). The Plan qualifies as a deferred salary arrangement under Section 401(k) of the Internal
Revenue Code. Under the Plan, participating employees may defer a portion of their pretax earnings, up to the Internal Revenue Service annual
contribution limit. In addition, under the Plan the Company makes a discretionary matching contribution of up to 33% up to a maximum of 6%
of the participant's total eligible compensation. The Company's matching contributions vest over four years from the participant's date of hire.
Total contributions for 1999, 2000 and 2001 were $375,000, $818,000 and $1.3 million, respectively.
15. Supplemental Disclosure of Cash Flow Information
Less amount representing interest
(2,233
)
Present value of future lease payments
13,420
Less current portion
(11,674
)
$
1,746
$
116,985
Year ending
December 31,
In millions
2002
$
277.6
2003
122.2
2004
31.6
2005
1.2
Thereafter
0.3
Total
$
432.9
Year Ended December 31,
1999
2000
2001
(In thousands)
Cash paid during the year for interest
$
7,776
$
2,942
$
2,211
Cash paid during the year for income taxes
6,581
—
—
Non cash adjustments related to accretion of dividends
14,106
23,730
29,880
Common stock issued in conjunction with acquisition
30,000
106,698
1,876
Options issued in conjunction with acquisition
—
3,539
—