Earthlink 2004 Annual Report Download - page 82

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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. Accordingly, the Company adjusts the carrying values of those
investments to market value through unrealized gains (losses) included in stockholders’ equity. Investments in other companies as of
December 31, 2003 and 2004 included $0.6 million and $2.6 million, respectively, of investments carried at cost, and zero and $1.5 million,
respectively, of investments recorded at fair value. Gross unrealized gains were $1.0 million as of December 31, 2004. There were no gross
unrealized losses.
During the years ended December 31, 2002, 2003 and 2004, the Company recognized losses of $0.6 million, $0.2 million and
$1.4 million, respectively, on certain of its investments in other companies as a result of a decline in fair value that was considered other than
temporary. These losses are included in loss on investments in other companies in the Consolidated Statements of Operations.
7. Property and Equipment
Property and equipment is recorded at cost and consists of the following as of December 31, 2003 and 2004:
During the year ended December 31, 2004, the Company wrote-down and retired abandoned and disposed property and equipment
associated with the 2004 Plan with an aggregate net book value of $9.2 million. The retired property and equipment associated with the 2004
Plan, primarily leasehold improvements, furniture and office equipment, had a cost basis of $35.1 million and accumulated depreciation of
$25.9 million. Also during the year ended December 31, 2004, the Company wrote-down and retired abandoned and disposed other property
and equipment that had a cost basis of $37.1 million and accumulated depreciation of $36.2 million.
Depreciation expense charged to operations, which includes depreciation expense associated with property under capital leases, was
$106.7 million, $79.9 million and $54.9 million for the years ended December 31, 2002, 2003 and 2004, respectively.
79
As of December 31,
2003
2004
(in thousands)
Data center and network equipment
$
232,508
$
244,358
Office and other equipment
206,366
173,057
Land and buildings
13,536
13,936
Leasehold improvements
80,372
58,147
Construction in progress
11
4,440
532,793
493,938
Less accumulated depreciation
(423,983
)
(416,470
)
$
108,810
$
77,468