Earthlink 2007 Annual Report Download - page 105

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EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED—(Continued)
17. Supplemental Disclosure of Cash Flow Information
18. Related Party Transactions
HELIO
Upon HELIO's formation, EarthLink and HELIO entered into a services agreement for EarthLink to provide to HELIO facilities,
accounting, tax, billing, procurement, risk management, payroll, human resource, employee benefit administration and other support services in
exchange for management fees. The management fees were determined based on EarthLink's costs to provide the services, and management
believes such fees are reasonable. The total amount of fees that HELIO pays to EarthLink depends on the extent to which HELIO utilizes
EarthLink's services. Fees for services provided to HELIO are reflected as reductions to the associated expenses incurred by EarthLink to
provide such services. During the years ended December 31, 2005, 2006 and 2007, fees received for services provided to HELIO were
$3.0 million, $2.3 million and $1.6 million, respectively.
EarthLink markets HELIO's products and services, and during the years ended December 31, 2005, 2006 and 2007, EarthLink generated
revenues of $0.3 million, $0.9 million and $0.1 million, respectively, associated with marketing HELIO's services.
EarthLink purchases wireless Internet access devices and services from HELIO. During the years ended December 31, 2005, 2006 and
2007, fees paid for products and services received from HELIO were $0.9 million, $0.9 million and $0.6 million, respectively.
As of December 31, 2006 and 2007, the Company had accounts receivable from HELIO of approximately $0.8 million and $0.2 million,
respectively.
Officers and Directors
Prior to December 31, 2001, the Company had made equity investments totaling $10.0 million in EVG, an affiliate of eCompanies, LLC
("eCompanies"). The carrying value of the investment in EVG as of December 31, 2006 and 2007 was zero. Sky Dayton, a member of
EarthLink's Board of Directors and HELIO's Board of Directors, is a founding partner in EVG, a limited partnership formed to invest in
98
Year Ended December 31,
2005
2006
2007
(in thousands)
Significant non
-
cash transactions
Non
-
cash working capital adjustments to reduce goodwill
$
129
$
1,187
$
—
Assets acquired pursuant to capital lease agreement
—
—
2,927
Additional cash flow information
Cash paid during the year for interest
$
383
$
1,416
$
10,225
Cash paid during the year for income taxes
5,507
850
68
Purchase of businesses
Cash paid, net of cash acquired
$
9,352
$
108,663
$
—
Issuance of common stock
—
20,194
379
Net liabilities incurred and assumed
4,203
15,979
(379
)
Intangible assets acquired
$
13,555
$
144,836
$
—