Earthlink 2002 Annual Report Download - page 73

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$29.7 million, respectively. The Company also leases equipment, primarily data communications equipment, under non-cancelable capital
leases. Most of the Company's capital leases include escalation clauses and purchase options at the end of the lease term.
During the years ended December 31, 2000 and 2001, the Company financed the acquisition of data processing and office equipment
amounting to approximately $5.6 million and $0.9 million, respectively, by entering into a number of leases and agreements for the sale and
leaseback of equipment. The sale-leaseback transactions are recorded at cost, which approximates the fair market value of the property, and
therefore, no gains or losses have been recorded. The property remains on the books and continues to be depreciated. A financing obligation
representing the proceeds received is recorded and reduced as payments are made under the lease agreements.
Minimum lease commitments under non-cancelable leases at December 31, 2002 are as follows:
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 Level 3, Sprint and UUNet. EarthLink is, in effect, buying this capacity in bulk at a discount, and providing
access to EarthLink's
F-35
customer base at EarthLink's normal rates. Amounts payable at December 31, 2001 and 2002 under such agreements are included in accrued
communications costs in Note 7.
Minimum commitments under non-cancelable network service agreements are as follows at December 31, 2002:
Cost of revenues from these non-cancelable network service agreements totaled $323.9 million, $449.5 million and $263.3 million for the
years ended December 31, 2000, 2001, and 2002, respectively.
15. Profit Sharing Plans
Year Ending December 31,
Capital
Leases
Operating
Leases
(in thousands)
2003
$
4,907
$
25,004
2004
917
24,280
2005
8
18,892
2006
—
15,823
2007
—
11,405
Thereafter
—
14,977
Total minimum lease payments
5,832
110,381
Less aggregate sublease income
(3,730
)
Less amount representing interest
(1,844
)
Present value of future lease payments
3,988
Less current portion
(3,369
)
$
619
$
106,651
Year Ending December 31,
(in thousands)
2003
$
168,236
2004
101,530
2005
13,480
2006
10,157
2007
5,315
Thereafter
251
Total
$
298,969