Earthlink 2002 Annual Report Download - page 65

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Property under capital leases, primarily data communications equipment, aggregated $52.1 million and $22.9 million at December 31,
2001 and 2002, respectively. Included in accumulated depreciation and amortization are amounts amortized related to property under capital
lease of $42.3 million and $18.1 million at December 31, 2001 and 2002, respectively. Depreciation expense charged to operations, which
includes amortization expense associated with property under capital leases, was $73.6 million, $112.1 million and $106.7 million for the years
ended December 31, 2000, 2001 and 2002, respectively.
F-25
7. Other Accounts Payable and Accrued Liabilities
Other accounts payable and accrued liabilities consists of the following at December 31, 2001 and 2002:
8. Notes Payable
In February 2000, at the time of the merger of EarthLink Network and MindSpring, MindSpring had issued and outstanding
$180.0 million aggregate principal amount of its 5% Convertible Subordinated Notes due 2006. The notes were convertible into shares of
common stock of MindSpring at any time prior to their maturity or their redemption at a rate of 16 shares per each $1,000 principal amount of
notes, or $62.50 per share, subject to adjustment in certain circumstances. Upon completion of the merger of EarthLink Network and
MindSpring, EarthLink adopted the indentures and the notes became convertible into shares of EarthLink common stock. Completion of the
merger constituted a "change in control" of MindSpring under the indentures. Thus, each holder of notes had the right to demand payment
equal to 100% of the principal amount of the notes, plus accrued interest. Accordingly, in February 2000, the Company offered to purchase for
cash all of its 5% Convertible Subordinated Notes. On March 31, 2000, approximately $179.1 million of the $180.0 million aggregate principal
amount of the notes outstanding were tendered to the Company for repurchase. The total payment of $183.4 million, including interest, was
paid in April 2001. The repurchase resulted in an extraordinary loss of $5.3 million, which is included in merger related charges.
2001
2002
(in thousands)
Data center equipment
$
194,479
$
214,583
Office and other equipment
191,851
208,784
Land and buildings
6,773
13,518
Leasehold improvements
93,207
90,421
Construction in progress
7,355
202
493,665
527,508
Less accumulated depreciation and amortization
(257,677
)
(358,631
)
$
235,988
$
168,877
As of December 31,
2001
2002
(in thousands)
Accrued communications costs
$
75,051
$
59,832
Accrued advertising
20,943
28,871
Accrued bounties
7,027
9,416
Accrued professional fees and settlements
3,659
3,470
Accrued outsourced customer support
4,366
5,844
Allowance for refunds and chargebacks
4,100
4,100
Accrued taxes
5,491
15,595
Deposits and due to customers
8,668
6,576
Liabilities associated with non
-
cancelable leases
5,232
9,803
Customer base and fixed asset purchases
13,566
13,443
Other
21,887
13,337
$
169,990
$
170,287