Earthlink 2006 Annual Report Download - page 55

Contractual Obligations and Commitments
As of December 31, 2006, we had the following contractual commitments:
(1) These amounts represent base rent payments under non-cancelable operating leases for facilities and equipment that expire in various
years through 2014, as well as an allocation for operating expenses. Not included in these amounts is contracted sublease income of $3.6
million, $2.5 million, $1.7 million, $1.2 million and $0.1 million during the years ending December 31, 2007, 2008, 2009, 2010 and 2011,
respectively.
(2) These amounts represent non-cancelable network service agreements with third-party providers of Internet access that expire at various
dates through 2009 and other purchase commitments.
(3) During November 2006, we issued $258.8 million aggregate principal amount of Convertible Senior Notes due November 15, 2026 (the
“Notes”)
in a registered offering, which includes the exercise by the underwriters of their option to purchase an additional $33.8 million to
cover over-allotments. The Notes bear interest at 3.25% per year on the principal amount of the Notes until November 15, 2011, and
3.50% interest per year on the principal amount of the Notes thereafter, payable semi-annually in May and November of each year.
During the year ended December 31, 2006, we entered into a financing lease agreement with General Electric Capital Corporation to lease
certain equipment necessary to build out our municipal wireless infrastructure in selected markets. Under the agreement, we can lease up to
$75.0 million of assets. As of December 31, 2006, no equipment was leased pursuant to the financing agreement.
Share Repurchase Program
The Board of Directors has authorized a total of $550.0 million to repurchase our common stock under our share repurchase program. As
of February 28, 2007, we had utilized approximately $454.7 million pursuant to the authorizations and had $95.3 million available under the
current authorization. We may repurchase our common stock from time to time in compliance with the Securities and Exchange Commission’s
regulations and other legal requirements, and subject to market conditions and other factors. The share repurchase program does not require us
to acquire any specific number of shares and may be terminated by the Board of Directors at any time. We have not repurchased common stock
under this program since October 2006.
Income Taxes
We continue to maintain a full valuation allowance against our deferred tax assets of $356.9 million, consisting primarily of net operating
loss carryforwards, and we may recognize deferred tax assets in future periods when they are determined to be realizable. To the extent we may
owe income taxes in future periods, we intend to use our net operating loss carryforwards to the extent available to reduce cash outflows for
income taxes.
54
Year Ending December 31,
2007
2008
2009
2010
–
2014
(in millions)
Non
-
cancelable operating leases(1)
$
14.9
$
11.1
$
12.5
$
50.5
Non
-cancelable network service agreements and purchase
commitments(2)
55.6
37.1
5.1
—
Long-term debt(3)
—
—
—
258.8
$
70.5
$
48.2
$
17.6
$
309.3