Earthlink 2004 Annual Report Download

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FORM 10-K
EARTHLINK INC
(Annual Report)
Filed 3/11/2005 For Period Ending 12/31/2004
Address 1375 PEACHTREE STREET SUITE 400
ATLANTA, Georgia 30309
Telephone 404-815-0770
CIK 0001102541
Industry Computer Services
Sector Technology
Fiscal Year 12/31

Table of contents

  • Page 1
    EARTHLINK INC FORM 10-K (Annual Report) Filed 3/11/2005 For Period Ending 12/31/2004 Address Telephone CIK Industry Sector Fiscal Year 1375 PEACHTREE STREET SUITE 400 ATLANTA, Georgia 30309 404-815-0770 0001102541 Computer Services Technology 12/31

  • Page 2
    ... to Commission File Number: 001-15605 EARTHLINK, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 58-2511877 (State of Incorporation) (I.R.S. Employer Identification No.) 1375 Peachtree St., Atlanta, Georgia 30309 (Address of Principal Executive Offices, Including Zip Code) (404...

  • Page 3
    ... Controls and Procedures Other Information PART III Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management Certain Relationships and Related Transactions Principal Accounting Fees and Services PART IV Exhibits and...

  • Page 4
    ... business customers. Our primary service offerings are narrowband, broadband or high-speed, and wireless Internet access services; web hosting; and advertising and related services. We provide our broad range of services to more than five million paying customers through a nationwide network of dial...

  • Page 5
    ... subscribers, Norton TM Security products and email-by-phone. In addition, we provide a customizable Personal Start Page TM that lets subscribers create their own launch point to the Internet. As a result, subscribers can search, organize, shop and communicate-via email, chat or Instant Messaging...

  • Page 6
    ...premium and value-priced dial-up access over traditional telephone lines and wireless access through a variety of handheld and laptop devices; high-speed or broadband access via DSL, cable modem, satellite and dedicated circuits; web hosting; and advertising and other value-added services. We derive...

  • Page 7
    ... consist of monthly fees charged for high-speed, high-capacity access services including DSL, cable, satellite and dedicated circuit services; installation fees; early termination fees; reactivation fees; shipping and handling fees; and equipment revenues associated with the sale of modems and other...

  • Page 8
    ..., broadband and wireless Internet access subscribers: • toll-free, live telephone assistance available seven days a week, 24 hours a day; • email-based and live chat assistance available seven days a week, 24 hours a day; • help sites and Internet guide files on the EarthLink web site...

  • Page 9
    ... web page that provides additional information about phishers and similar online scams and actions subscribers can take to further protect themselves. EarthLink Accelerator EarthLink offers EarthLink Accelerator in its premium-priced narrowband Internet access service offering at no extra charge...

  • Page 10
    ... health care facilities. However, we are permitted to bill our customers to recover universal service fees passed through to us by our telecommunications vendors. The classification of Internet access services as "information services" may discourage states from regulating ISPs as telecommunications...

  • Page 11
    ... over six of Time Warner Cable's markets, Bright House Networks continues to make access available. EarthLink also offers broadband Internet access over cable to Comcast customers in the Seattle and Boston area markets. In August 2003, the FCC issued its UNE Triennial Review Order which, among other...

  • Page 12
    ... access to wholesale broadband DSL and cable lines and for gaining increasingly favorable prices is to offer products, features and services which enhance customers' online experiences and thus create consumer demand. To this end, we are attempting to gain access to a larger number of cable...

  • Page 13
    ... markets to offering EarthLink Experience, a premium, add-on Internet service, to Charter subscribers in these markets for a smaller monthly fee. The premium Internet service includes functionality available in our current retail premium narrowband and broadband service offerings such as Pop-Up...

  • Page 14
    ... The public can obtain any documents that we file with the SEC at http://www.sec.gov. We also make available free of charge on or through our Internet web site ( http://www.earthlink.net ) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable...

  • Page 15
    ... high-speed access services and have generally not been required by law to make access available. We continue to evaluate the commercial feasibility of emerging alternative broadband technologies, including power line and fixed wireless, to gain further wholesale broadband access and create greater...

  • Page 16
    ... companies, such as Yahoo!, who have expanded their service offerings; • cable television companies providing broadband access, including Comcast, Charter and Cox Communications, Inc.; and • utility and local and long distance telephone companies. Competition is likely to continue increasing...

  • Page 17
    ... our customer base, that we will not continue to experience increased churn rates, or that we will not reduce the price of our value-priced services to remain competitive. In addition, our value-priced narrowband access services are not as profitable as our premium-priced narrowband access services...

  • Page 18
    ...are Covad and Time Warner Cable. We also purchase broadband access from ILECs, CLECs and other cable providers. We also use various telecommunications providers for voice services, including our VoIP services, our wireless services and to provide toll-free and fee-based customer support. Our ability...

  • Page 19
    ... with Time Warner Cable, Bright House Networks and Comcast that allow us to provide broadband services over each company's cable network in select markets. We do lesser amounts of business with a wide variety of local, regional and other national providers. The availability of and charges for access...

  • Page 20
    ...at a commercially reasonable cost, or at all. We may experience increases in our telecommunications usage that exceed our available telecommunications capacity. As a result, users may be unable to register or log on to use our services, may experience a general slow-down in their Internet connection...

  • Page 21
    ... become subject to FCC and state regulation as Internet access services and telecommunications services converge. If the regulatory status of ISPs changes or if regulatory-related charges are imposed on ISPs or on dial-up consumers to access the Internet, our business may be adversely affected. The...

  • Page 22
    ... our needs or terminate their relationships with us. Our business and financial results depend, in part, on the availability and quality of our customer support services. We outsource a majority of our technical and customer support functions. As a result, we maintain only a small number of internal...

  • Page 23
    ... number of Internet users has been rising, the Internet infrastructure may not expand fast enough to meet the increased levels of demand. If use of the Internet as a medium for commerce declines or grows at a slower rate than we anticipate, our revenues could be lower than expected and our business...

  • Page 24
    ... maintain and occupy the following principal properties: Approximate Facilities Location Square Feet Lease Expiration Principal executive and corporate offices Operations and corporate offices Operations and corporate offices Atlanta, GA Pasadena, CA San Francisco, CA 328,000 141,000 26,000 2014...

  • Page 25
    ... such as SK-EarthLink, and to repurchase our common stock. Therefore, we do not anticipate paying any cash dividends in the foreseeable future. Equity Compensation Plans Information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2004 is set forth...

  • Page 26
    ...price paid per share for each month in the three months ended December 31, 2004 are as follows: Total Number of Maximum Dollar Total Number Average Shares Repurchased Value that May of Shares Price Paid as Part of Publicly Yet be Purchased Repurchased per Share Announced Program(1) Under the Program...

  • Page 27
    ... per share amounts) 2004 Statement of operations data: Revenues Operating costs and expenses Income (loss) from operations Net income (loss) Deductions for accretion dividends (1) Net income (loss) attributable to common stockholders Basic net income (loss) per share (2) Diluted net income (loss...

  • Page 28
    ... stock was exchanged for one share of common stock of EarthLink. Investments in marketable securities consist of debt securities classified as available-for-sale and have maturities greater than 90 days from the date of acquisition, including auction rate securities that have reauction periods of...

  • Page 29
    ... to maintain or increase our customer levels if we do not have uninterrupted and reasonably priced access to local and long distance telecommunications systems for delivering dial-up and/or broadband access, including, specifically, that integrated local exchange carriers and cable companies may not...

  • Page 30
    ... services to individual and business customers. Our primary service offerings are narrowband, broadband or high-speed, and wireless Internet access services; web hosting services; and advertising and related services. We provide our broad range of services to more than five million paying customers...

  • Page 31
    companies ("RBOCs") offering broadband access over their own cable or telephone lines. However, to attract and retain customers, we continue to focus on improving the high-quality Internet experience EarthLink offers, including providing superior customer and technical service and differentiating ...

  • Page 32
    ...organic subscriber additions. Our marketing relationship is not exclusive, and Dell may pursue relationships with other ISPs. We have an agreement with Time Warner Cable and Bright House Networks, companies whose networks pass more than 22 million homes, to offer our broadband Internet services over...

  • Page 33
    ... per user ("ARPU") are terms commonly used in EarthLink's industry. The following table sets forth subscriber and operating data for the periods indicated: 2002 As of December 31, 2003 2004 Subscriber Data (a) Narrowband subscribers Broadband subscribers Web hosting accounts Total subscribers at...

  • Page 34
    ... monthly service revenue per user (subscriber). Narrowband service ARPU is computed by dividing average monthly service revenue for the period by the average number of subscribers for the period. Service revenue includes monthly fees charged to customers for dial-up and wireless Internet access...

  • Page 35
    ...: Revenues: Narrowband access Broadband access Web hosting Advertising and other value-added services Total revenues Operating costs and expenses: Telecommunications service and equipment costs Sales incentives Total cost of revenues Sales and marketing Operations and customer support General and...

  • Page 36
    ... December 31, 2004 Compared to Year Ended December 31, 2003 Narrowband access revenues Narrowband access revenues primarily consist of monthly fees charged to customers for dial-up and wireless Internet access; installation fees; early termination fees; equipment revenues associated with selling...

  • Page 37
    ... at an accelerated rate which would adversely affect our business. Broadband access revenues Broadband access revenues consist of fees charged for high-speed, high-capacity access services including digital subscriber line ("DSL"), cable, satellite and dedicated circuit services; installation fees...

  • Page 38
    ... cable companies) markets the service, has latitude in establishing price and pays EarthLink to provide underlying Internet services such as authentication, email, web space, news and varying degrees of customer support. Retail services are generally priced above $40 per month per subscriber...

  • Page 39
    ... publications, including the Personal Start Page TM ; and referring our customers to our partners' products and services. Advertising and other value-added services revenues also include certain ancillary services sold as add-on features to our Internet services, such as email storage and security...

  • Page 40
    ... and customer support Operations and customer support expenses consist of costs associated with technical support and customer service, providing our subscribers with toll-free access to our technical support and customer service centers, maintenance of customer information systems, software...

  • Page 41
    ... increased outsourced labor costs associated with outsourcing certain contact center activities. General and administrative General and administrative expenses consist of fully burdened costs associated with the executive, finance, legal and human resources departments; outside professional services...

  • Page 42
    ... loss carryforwards to offset taxable income in 2004, state income and federal and state alternative minimum tax ("AMT") amounts aggregating $2.5 million were payable, and the AMT was payable primarily due to the net operating loss carryforward limitations associated with the AMT calculation...

  • Page 43
    ..., dedicated circuit and business sDSL subscribers (who generally pay a higher monthly fee) to retail cable subscribers. The decrease also resulted from introductory pricing offered to new retail broadband customers to stimulate increased sales and lower equipment revenues for our satellite services...

  • Page 44
    ... Charter, we excluded approximately 152,000 Charter wholesale broadband subscribers from our total paying subscriber count beginning in the three months ended September 30, 2003. See "Regulatory Environment" in the Business section of this 10-K for more information. Web hosting revenues Web hosting...

  • Page 45
    ..., broadband and valuepriced access services and increased support for new sales channels. These increases were partially offset by declines in sales and marketing expenses associated with our EarthLink Everywhere initiative and our MailStation products and services. Operations and customer support...

  • Page 46
    ..., California; San Jose, California; and Pasadena, California; and reduced contact center operations in Atlanta, Georgia. Approximately 1,140 employees were directly impacted, primarily customer support personnel. As of December 31, 2004, we had paid all telecommunications service termination costs...

  • Page 47
    ... Packages, and payments associated with the 2003 Plan. In order to continue improving cash flows from operating activities, we must seek to maintain or increase levels of revenues while reducing telecommunications costs per subscriber, improve the efficiency of our customer support efforts, leverage...

  • Page 48
    ...technical and customer support services. We also used $3.8 million for investments in other companies and $2.4 million for acquiring subscriber bases from other ISPs, primarily related to paying liabilities incurred in the acquisitions of subscriber bases during 2003. Management continuously reviews...

  • Page 49
    ... years through 2014. Access to the Internet for customers outside of our base of owned POPs is provided through capacity leased from a number of third-party providers under non-cancelable network service agreements expiring in 2005 and 2006. During the year ended December 31, 2004, we extended the...

  • Page 50
    ... of our and SK-EarthLink's services, our ability to maintain and expand our customer base, the rate of expansion of our network infrastructure, the size and types of acquisitions in which we may engage, the level of resources required to expand our sales and marketing programs, and general economic...

  • Page 51
    ... our other accounting policies is included in the Notes to Consolidated Financial Statements. Revenue recognition Gross versus net revenue recognition. We maintain relationships with certain telecommunications partners (including cable companies) in which we provide services to customers using the...

  • Page 52
    .... We have marketing arrangements with a number of leading hardware and software manufacturers to include our Internet access software pre-installed on or included with their products. We also market our products and services through retailers. We pay fees to retailers, manufacturers or other...

  • Page 53
    ...is included in the fair values of identifiable assets acquired and liabilities assumed. If the facility to be closed is not associated with an acquisition, we accrue the estimated future costs of the lease obligation, net of estimated sublease income, and record facility exit costs in the statements...

  • Page 54
    ... the carrying amount may not be recoverable. Our tests involve critical estimates reflecting management's best assumptions and estimates related to, among other factors, subscriber additions, churn, prices, marketing spending, operating costs and capital spending. Significant judgment is involved in...

  • Page 55
    ..., but we expect to be able to exert significant influence over SK-EarthLink's operating and financial policies. As a result, we expect to apply the equity method to our investment in SK-EarthLink and record our proportionate share of SK-EarthLink's net income (loss) in our statement of operations as...

  • Page 56
    ... by security type as of December 31, 2003 and 2004. As of December 31, 2003 As of December 31, 2004 Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value (in thousands) Asset-backed (including auction rate) securities U.S. corporate notes Government agency notes Commercial paper...

  • Page 57
    ...of December 31, 2004 Estimated Estimated Fair Fair Cost Value Cost Value (dollars in thousands) Included in cash and cash equivalents Weighted average interest rate Weighted average maturity (mos.) Included in marketable securities-short-term Weighted average interest rate Weighted average maturity...

  • Page 58
    Item 8. Financial Statements And Supplementary Data. EARTHLINK, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2003 and 2004 Consolidated Statements of Operations for the years ended ...

  • Page 59
    ... in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of EarthLink, Inc.'s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee...

  • Page 60
    ...assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the...

  • Page 61
    ... securities Other long-term assets Property and equipment, net Subscriber bases, net Goodwill and other indefinite life intangible assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable Accrued payroll and related expenses Other accounts payable...

  • Page 62
    ...per share data) Revenues: Narrowband access Broadband access Web hosting Advertising and other value-added services Total revenues Operating costs and expenses: Telecommunications service and equipment costs Sales incentives Total cost of revenues Sales and marketing Operations and customer support...

  • Page 63
    ... stock purchase plan Issuance of restricted stock units Vesting of restricted stock units and phantom share units Amortization of deferred compensation Repurchase of common stock Unrealized holding gains on certain investments Net income Total comprehensive income Balance as of December 31, 2004 26...

  • Page 64
    ...: Purchases of property and equipment, net Proceeds from the sale of fixed assets Investments in marketable securities Purchases Sales and maturities Investments in other companies Purchases of businesses, net of cash acquired Purchases of subscriber bases Net cash provided by (used in) investing...

  • Page 65
    ...business customers. EarthLink's primary service offerings are narrowband, broadband or high-speed, and wireless Internet access services; web hosting services; and advertising and related services. The Company provides a broad range of products and services to more than five million paying customers...

  • Page 66
    ... the Company's Internet access services; fees paid to content providers for information provided on the Company's online properties, including the Company's Personal Start Page TM ; the costs of equipment sold to customers for use with the Company's narrowband and broadband Internet access services...

  • Page 67
    ... price of EarthLink's products or services; however, if the Company receives an identifiable benefit whose fair value can be reasonably estimated in exchange for the fees, the Company classifies the fees as operating expenses. Regulatory Risk EarthLink purchases broadband access from incumbent local...

  • Page 68
    ...2002, 2003 and 2004, respectively, because the Company does not invoice the customer for the welcome kits or the associated shipping. All other shipping and handling costs are included in cost of revenues. Software Development Costs EarthLink accounts for research and development costs in accordance...

  • Page 69
    ... price of the Company's common stock during the respective period, outstanding shares of Series A and Series B convertible preferred stock on an as converted basis and restricted stock units. Stock-Based Compensation As of December 31, 2004, EarthLink had various stock-based compensation plans...

  • Page 70
    ... used to compute pro forma net income (loss) is the estimated fair value at the date of grant using the BlackScholes option-pricing model with the following assumptions: Year Ended December 31, 2002 2003 2004 Annual dividends Expected volatility Risk-free interest rate Expected life zero zero zero...

  • Page 71
    ... grade and include corporate bonds and government agency notes. The Company has classified all short- and long-term investments in marketable securities as available-for-sale. Available-for-sale securities are carried at fair value, with any unrealized gains and losses, net of tax, included...

  • Page 72
    ...The Company generally bills for Internet access services monthly in advance for customers on month-to-month service plans. The Company offers prepay plans that allow customers to prepay for services for periods of up to two years. Through January 2004, the Company's wholly-owned subsidiary, PeoplePC...

  • Page 73
    ..., investments in marketable securities and trade receivables approximate their fair values. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is determined using the straight-line method over the estimated useful lives of the various...

  • Page 74
    ... the book value exceeds the estimated fair value. The Company determined that its goodwill and other indefinite life intangible assets were not impaired based on its annual test during the years ended December 31, 2002, 2003 and 2004. Long-Lived Assets The Company accounts for long-lived assets...

  • Page 75
    ... Company will evaluate the impact of the adoption of the accounting provisions of EITF Issue No. 03-1. In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based Payment," which replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123 (R) requires that compensation cost relating...

  • Page 76
    ... the acquisition date ("Membership Customers") and approximately 55,000 value-priced, monthly billed subscribers. EarthLink paid $0.0221 per share in cash, or a total of approximately $12.9 million, and paid transaction costs of $1.3 million. The cash used to purchase businesses as presented in the...

  • Page 77
    ... purchase price to the acquired PeoplePC subscriber base and $2.0 million to fixed assets for proprietary technologies and software acquired in the transaction. EarthLink assumed approximately $24.6 million in deferred service liabilities for the acquired Membership Customers. The Company determined...

  • Page 78
    ... contact center operations, which was executed during the three months ended March 31, 2004 (the "2004 Plan"). Under the 2004 Plan, EarthLink closed contact center operations in Harrisburg, Pennsylvania; Roseville, California; San Jose, California; and Pasadena, California; and reduced its contact...

  • Page 79
    ...$ (867 ) (6,467 ) - $ (6,467 ) 2,558 - $ 2,558 Balance December 31, 2004 $ 5 2004 Plan Severance and personnel related costs Real estate and telecommunications costs, including non-cancelable leases Abandoned and disposed assets Net Adjustments $ 26 Non-Cash Deferred Rent Items Reclassification...

  • Page 80
    ... assets that are not deemed to have indefinite lives acquired in conjunction with the purchases of businesses and subscriber bases from other ISPs, but exclude any acquired software. Generally, definite life intangible assets are amortized on a straight-line basis over three years from the date of...

  • Page 81
    ... time the Company would expect to receive the amortized cost basis of the investment based on the underlying contractual arrangement. The following table summarizes contractual maturities of the Company's investments in marketable securities as of December 31, 2004: Amortized Estimated Cost Fair...

  • Page 82
    EARTHLINK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Investments in other companies The Company accounts for investments in other companies under the cost method of accounting and classifies investments in other companies which are publicly traded as available-for-sale securities....

  • Page 83
    ... of December 31, 2003 and 2004: As of December 31, 2003 2004 (in thousands) Accrued communications costs Accrued advertising Accrued taxes Accrued bounties Liabilities associated with non-cancelable operating leases Accrued outsourced customer support Subscriber base and fixed asset purchases Other...

  • Page 84
    ... Sprint Corporation ("Sprint") for $53.1 million, which was executed pursuant to a separate authorization by the Board of Directors. In October 2003, the Company filed a registration statement with the SEC with respect to a rescission offer for approximately 0.2 million shares of EarthLink common...

  • Page 85
    ... of Directors, customers, consultants, lessors, creditors and others. The Company did not issue warrants during the years ended December 31, 2002, 2003 and 2004. As of December 31, 2004, warrants to purchase a total of 242,000 shares of common stock were outstanding at exercise prices ranging from...

  • Page 86
    ... $ 4.34 $ 4.71 The following table summarizes the status of the Company's stock options and warrants as of December 31, 2004: Stock Options and Warrants Outstanding Weighted Average Remaining Range of Number Contractual Exercise Prices Outstanding Life (in thousands) Stock Options and Warrants...

  • Page 87
    ...up to 15% of eligible compensation deducted from their pay to purchase EarthLink common stock. Under the ESPP, withholdings were used to purchase shares at the beginning of each quarter at a per share purchase price equal to 85% of the lesser of the closing price on the first trading day of the just...

  • Page 88
    ...2002, 2003 and 2004: Year Ended December 31, 2002 2003 2004 (in thousands) Federal income tax (benefit) provision at statutory rate State income taxes, net of federal benefit Nondeductible expenses Net change to valuation allowance Change in valuation allowance associated with realized deferred tax...

  • Page 89
    ...well as renewal options. The total amount of base rent payments, net of allowances and incentives, is being charged to expense using the straight-line method over the terms of the leases. In addition to the base rent payments, EarthLink generally pays a monthly allocation of the buildings' operating...

  • Page 90
    ... taxes, maintenance and utility costs. 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 and Sprint. EarthLink is, in effect, buying this capacity in bulk...

  • Page 91
    ...-held companies are stated at cost, net of other-than-temporary impairments. The Company is exposed to interest rate risk with respect to investments in marketable securities and market price risk with respect to investments in marketable securities and investments in publicly-traded and privately...

  • Page 92
    ... December 31, 2002, 2003 and 2004, the Company's relationship with Sprint generated approximately 10% of EarthLink's total gross organic subscriber additions. Sprint may pursue relationships with other ISPs, and a significant decrease in the number of gross subscriber additions generated through the...

  • Page 93
    ... 31, 2004, the Company paid Boingo $0.8 million pursuant to various arrangements, including a software license, maintenance and network access agreement and a revenue sharing arrangement. 19. Subsequent Event In January 2005, EarthLink entered into a definitive agreement with SK Telecom Co., Ltd...

  • Page 94
    ... market SK-EarthLink's services. 20. Quarterly Financial Data (Unaudited) The following table sets forth certain unaudited quarterly consolidated financial data for the eight quarters in the period ended December 31, 2004. In the opinion of the Company's management, this unaudited information has...

  • Page 95
    ..., an independent registered public accounting firm, as stated in their report which is included herein. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2004 that have...

  • Page 96
    ... Proxy Statement or in a subsequent amendment to this Report. Information relating to EarthLink's Code of Ethics for directors and officers will be set forth under the caption "Proposal 1-Election of Directors-Corporate Governance Matters-Codes of Ethics" in the above-referenced Proxy Statement or...

  • Page 97
    ... to Registration Statement on Form S-8-File No. 333108065). Summary of amendment to the EarthLink, Inc. Deferred Compensation Plan for Directors and Certain Key Employees (incorporated by reference to EarthLink, Inc.'s Report on Form 8-K dated December 13, 2004-File No. 001-15605). 10.1#- 10...

  • Page 98
    ...of the 2005 bonus plan for executive officers (incorporated by reference to EarthLink, Inc.'s Report on Form 8-K dated February 15, 2005-File No. 001-15605). Contribution and Formation Agreement Among SK Telecom International, Inc., SK Telecom Co., Ltd. and EarthLink, Inc. (incorporated by reference...

  • Page 99
    ... Agreement of SK-EarthLink Management Corp. (incorporated by reference to Exhibit 10.5 of EarthLink, Inc.'s Report on Form 8-K dated January 26, 2005-File No. 001-15605). Subsidiaries of the Registrant. Consent of Ernst & Young LLP, an independent registered public accounting firm. Power of Attorney...

  • Page 100
    ...of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EARTHLINK, INC. By: /s/ CHARLES G. BETTY Charles G. Betty, Chief Executive Officer Date: March 11, 2005 Each person whose signature appears below hereby constitutes and appoints...

  • Page 101
    Date: March 11, 2005 By: /s/ ROEBRT M. KAVNER Robert M. Kavner, Director Date: March 11, 2005 By: /s/ LINWOOD A. LACY, JR. Linwood A. Lacy, Jr., Director Date: March 11, 2005 By: /s/ THOMAS E. WHEELER Thomas E. Wheeler, Director 98

  • Page 102
    ... Kingston Atlanta Partners, L.P. and MindSpring Enterprises, Inc., as amended (incorporated by reference to Exhibit 10.1 of EarthLink, Inc.'s Report on Form 10-Q for the quarterly period ended March 31, 2001-File No. 001-15605). Fourth Amendment to Office Lease between California State Teacher...

  • Page 103
    ...of the 2005 bonus plan for executive officers (incorporated by reference to EarthLink, Inc.'s Report on Form 8-K dated February 15, 2005-File No. 001-15605). Contribution and Formation Agreement Among SK Telecom International, Inc., SK Telecom Co., Ltd. and EarthLink, Inc. (incorporated by reference...

  • Page 104
    July 21, 2004

  • Page 105
    ... 2.7. Action Without Meeting 2.8. Notice by Electronic Transmission 2.9. Business Considered by Stockholders at Annual Meetings 2.10. Business Considered by Stockholders at Special Meetings ARTICLE III BOARD OF DIRECTORS 3.1. Powers 3.2. Election of Directors 3.3. Compensation 3.4. Meetings...

  • Page 106
    ... Fiscal Year 7.2. Bank Deposit, Checks, Etc ARTICLE VIII BOOKS AND RECORDS 8.1. Place of Keeping Books 8.2. Examination of Books ARTICLE IX NOTICES AND WAIVERS 9.1. Requirements of Notice 9.2. Waivers ARTICLE X SEAL ARTICLE XI POWERS OF ATTORNEY ARTICLE XII INDEMNIFICATION 12.1. Indemnification 12...

  • Page 107
    AMENDED AND RESTATED BYLAWS of EARTHLINK, INC. ARTICLE I OFFICES EarthLink, Inc. (the "Corporation") shall at all times maintain a registered office in the State of Delaware and a registered agent at that address but may have other offices located in or outside of the State of Delaware as the Board ...

  • Page 108
    ... at the meeting, arranged in alphabetical order and showing the address of and the number of shares registered in the name of each stockholder, shall be prepared by the Secretary or the transfer agent in charge of the stock ledger of the Corporation. Such list shall be open to the examination of any...

  • Page 109
    ... of such stockholder's intent to bring such proposed business before all the stockholders for consideration at the annual meeting has been given, either by personal delivery or by the United States mail, postage prepaid, to the Secretary of the Corporation not later than ninety (90) days in advance...

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    ...residents of the State of Delaware. 3.3. Compensation . The Board of Directors, or a committee thereof, may from time to time by resolution authorize the payment of fees or other compensation to the directors for services as such to the Corporation, including, but not limited to, fees for serving as...

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    ... director or (ii) the date and time the Corporation receives confirmation that the notice was successfully sent by the applicable means. Personal and telephonic notice shall be deemed given at such a time as such notice is actually provided to the director. Regular meetings of the Board of Directors...

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    ... filing of such minutes shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. ARTICLE IV OFFICERS 4.1. Titles and Election . The officers of the Corporation shall be the Chief Executive Officer, President...

  • Page 113
    ... Directors may from time to time prescribe or determine, the following officers shall have the following powers and duties: (a) Chief Executive Officer . The Chief Executive Officer shall be charged with general supervision of the management, business, affairs and policy of the Corporation, shall be...

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    ... be designated by the Board of Directors or by the Chief Executive Officer if the Board of Directors does not do so. He or she may endorse for deposit or collection all checks, notes and similar instruments payable to the Corporation or to its order. He or she shall keep accurate books of account of...

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    ..., removal, increase in the authorized number of directors or otherwise, shall be filled in the manner provided in the Certificate of Incorporation. (b) Corporation. 5.3. Removals . Officers . The Board of Directors may at any time or from time to time fill any vacancy among the officers of the...

  • Page 116
    ... States or elsewhere as may be designated from time to time by the Board of Directors or by such officer or officers as the Board of Directors may authorize to make such designations. All checks, drafts or other orders for the withdrawal of funds from any bank account shall be signed by such person...

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    ...a post office, letter box or mail chute postage prepaid and addressed to the person to whom such notice is directed at the address of such person on the records of the Corporation, and such notice shall be deemed given at the time when the same shall be thus mailed or (ii) if applicable, as provided...

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    ... action by the Board of Directors, any officer of the Corporation may execute, for and on behalf of the Corporation, waivers of notice of meetings of stockholders and proxies, or may vote shares directly, for such meetings of any company in which the Corporation may hold voting securities. ARTICLE...

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    ... the power to indemnify such person against such expense, liability or loss under the DGCL. The Corporation may enter into contracts with any director, officer, employee or agent of the Corporation or of any Covered Entity providing indemnification and advancement of expenses and may create a trust...

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    ... the Supporting Documentation, the Indemnitee shall be deemed to be, and shall be, entitled to indemnification unless such indemnification is prohibited by law. The termination of any Proceeding described in Section 1 of this Article XII, or of any claim, issue or matter therein, by judgment, order...

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    ... accordingly. (e) Definitions . For purposes of this Article XII: "Authorized Officer" means any one of the Chief Executive Officer, the President, or any Executive Vice (i) President. (ii) "Change in Control" means the occurrence of any of the following: (i)(a) the Corporation consolidates with...

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    ... include any person who, under the applicable standards of professional conduct then prevailing under the law of the State of Delaware, would have a conflict of interest in representing either the Corporation or the Indemnitee in an action to determine the Indemnitee's rights under this Article XII...

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    ...Person" means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company...of an Authorized Officer, as a director of another corporation in which the Corporation had at the time of such service, directly or ...

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    ...the Corporation. ARTICLE XIII AMENDMENTS Except as provided otherwise by the laws of the State of Delaware or the Certificate of Incorporation, these Bylaws may be amended or repealed either: At any meeting of stockholders at which a quorum is present by vote of a majority of the number of shares of...

  • Page 125
    ...Subsidiaries of the Registrant Name Jurisdiction of Incorporation EarthLink/OneMain, Inc. PeoplePC Inc. Cidco Incorporated Delaware Delaware Delaware Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statements...

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    ..., the Chief Financial Officer of EarthLink, Inc., certify that: 1. 2. I have reviewed this annual report on Form 10-K for the year ended December 31, 2004 of EarthLink, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact...

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    ... 2002 In connection with the Annual Report on Form 10-K of EarthLink, Inc. (the "Company") for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Charles G. Betty, Chief Executive Officer of the Company, certify, pursuant to 18...

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