Earthlink 2002 Annual Report Download - page 74

In January 2001, the Company consolidated the legacy 401(k) savings plans of EarthLink Network and MindSpring into the
EarthLink Inc. 401(k) Plan ("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. Under the Plan, the Company makes a discretionary matching contribution of 33% of the first 6% of base compensation that a participant
contributes to the Plan. The Company's matching contributions vest over four years from the participant's date of hire. Total contributions for
the years ended December 31, 2000, 2001 and 2002 were $0.8 million, $1.3 million and $2.3 million, respectively.
Effective January 1, 2003, the Company increased its discretionary matching contribution to 50% of the first 2% of base compensation
contributed to the Plan and 33% of the next 4% of base compensation contributed to the Plan.
16. Supplemental Disclosure of Cash Flow Information
F-36
17. Related Party Transactions
Sprint
Under the network services agreement that was implemented in connection with the Strategic Alliance with Sprint, EarthLink paid Sprint
approximately $53.6 million, $75.2 million and $75.4 million during the years ended December 31, 2000, 2001 and 2002, respectively. The
aggregate amount due to Sprint was $12.4 million and $11.0 million at December 31, 2001 and 2002, respectively.
In connection with the Company's commercial arrangements with Sprint described in Note 2, the Company received approximately
$7.8 million, $22.0 million and $26.4 million during the years ended December 31, 2000, 2001 and 2002, respectively. As of December 31,
2001 and 2002, the Company had accounts receivable related to the commercial arrangements with Sprint of $6.8 million and $6.3 million,
respectively.
Apple
In connection with the multi-year partnership with Apple, EarthLink paid Apple approximately $34.3 million, $32.5 million and
$29.1 million during the years ended December 31, 2000, 2001 and 2002, respectively. The amount due Apple under the multi-
year partnership
was $2.1 million and $2.4 million at December 31, 2001 and 2002, respectively.
ITC Holding Company, Inc.
Mr. Campbell B. Lanier and Mr. William H. Scott, who prior to February 16, 2001 served on the Company's Board of Directors, resigned
from the Board of Directors on February 16, 2001. Messrs. Lanier and Scott are members of the Board of Directors of ITC Holding
Company, Inc. ("ITC Holding"), which was a substantial investor in EarthLink. ITC Holding sold its 10.7 million shares of EarthLink common
stock during February 2001. The Company entered into certain business relationships with several subsidiaries and affiliates of ITC Holding.
Except as noted below, none of these transactions were material for the years ended December 31, 2000 and 2001.
The Company purchases long-distance telephone services and wide area network transport service from ITC DeltaCom, Inc. ("ITC
DeltaCom"), a related party through relationships with ITC Holding. Long-distance charges from ITC DeltaCom totaled approximately
$9.6 million and $9.4 million during the years ended December 31, 2000 and 2001, respectively. The aggregate amount due to ITC DeltaCom
under the agreements was $0.5 million at December 31, 2001.
Officers and Directors
Year Ended December 31,
2000 2001 2002
(in thousands)
Issuance of common stock in conjuction with acquisitions
$
106,698
$
1,876
$
1,341
Options and warrants issued in conjunction with acquisitions
4,503
—
—
Non
-
cash acquisition costs
16,362
—
—
Assets acquired pursuant to capital leases
—
—
2,101
Cash paid during the year for interest
2,942
2,211
1,045
Non
-
cash adjustments related to accretion dividends
23,730
29,880
19,987