Earthlink 2003 Annual Report Download - page 30

$9.9 million of facility exit costs were accrued and
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unpaid as of December 31, 2003, primarily related to non-cancelable operating lease payments accrued but payable in future periods, net of
estimated sublease income. Excluding the accruals for the facility exit costs and the change in deferred revenue associated with the non-cash
revenues, we used approximately $30.4 million to reduce accounts payable, accrued and other liabilities, and deferred revenue. In order to
continue improving cash flows from operating activities, we must continue to increase revenues while reducing telecommunications costs per
subscriber, improving the efficiency of our customer support efforts, leveraging the cost structure of our business and effectively managing our
working capital.
Our investing activities used cash of $45.2 million. This consisted primarily of $28.4 million for capital expenditures, primarily associated
with network and technology center related projects. We have invested significantly in our network and technology center infrastructure and
will continue to invest capital to enhance the reliability and capacity of our network. We also used $11.9 million for the acquisition of
subscriber bases from other ISPs, of which $6.3 million relates to acquisitions completed in the fourth quarter of 2002. Management
continuously reviews industry and economic conditions to identify opportunities to pursue acquisitions of subscriber bases. Additionally, we
used $5.4 million for purchases of investments in marketable securities, net of sales and maturities of investments in marketable securities.
Financing activities used cash of $88.9 million. This consisted primarily of $90.2 million used to acquire 14.8 million shares of our
common stock. We may use cash in the future to purchase shares of our common stock pursuant to our $150.0 million share repurchase
program. Proceeds from the exercise of stock options and from the sale of common stock pursuant to our employee stock purchase program
were $4.4 million. Principal payments on capital lease agreements were $3.1 million. Our strategy over the past three years has been to reduce
the number of our capital leases, and we anticipate continuing to do so. We had $0.9 million of capital lease obligations as of December 31,
2003.
Cash flows for the year ended December 31, 2002
Our operating activities provided cash of $19.0 million. Our net loss of $148.0 million was the primary component of cash used in
operating activities. However, the effect of the loss on cash was more than offset by depreciation and amortization expenses relating to our
network, facilities and intangible assets of $217.6 million. Additional cash was used as a result of a $7.3 million increase in receivables and a
$0.5 million increase in prepaid expenses and other assets. In addition, the decreases in accounts payable, accrued expenses, other liabilities
and deferred revenue used $44.5 million in cash.
Our investing activities used cash of $36.4 million. This consists of proceeds realized from maturities, including sales, of marketable
securities, net of purchases, of $37.2 million and the use of $73.6 million for capital expenditures and the acquisitions of subscriber bases and
businesses. Capital equipment purchases were $32.5 million. Cash used in the purchase of subscriber bases from ISPs was $21.7 million. We
used $19.2 million to purchase PeoplePC, which included approximately $7.5 million related to the payment of acquisition-related and other
liabilities assumed in the transaction, and we used $1.1 million to acquire the final 20% of the outstanding stock of Cidco in January 2002.
Financing activities used cash of $24.5 million. Proceeds from the exercise of stock options and from the sale of common stock pursuant
to our employee stock purchase program were $1.6 million. Principal payments on capital lease agreements were $11.9 million. Additionally,
we used $14.2 million to acquire 2.6 million shares of our common stock.
Cash flows for the year ended December 31, 2001
Our operating activities provided cash of $47.4 million. Our net loss of $341.1 million was more than offset by depreciation and
amortization expenses relating to our network, facilities and intangible assets of $329.2 million and the non-cash write-off of investments and
Sprint-related intangibles of $10.0 million and $11.3 million, respectively. Additional cash was provided by a $9.8 million reduction in
receivables and a
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$10.0 million reduction in prepaid expenses and other assets. In addition, the net increase in accounts payable, accrued expenses, other
liabilities and deferred revenue provided $18.2 million in cash.
Our investing activities used cash of $288.0 million. This consists of net purchases of marketable securities of $170.0 million and the use
of $116.0 million for capital expenditures and subscriber base and business acquisitions. Capital equipment purchases were $69.5 million. Cash
used in the purchase of subscriber bases from ISPs was $40.7 million. In the fourth quarter of 2001, we used cash of $5.8 million to acquire
80% of the outstanding stock of Cidco.