Earthlink 2007 Annual Report Download - page 200

HELIO, INC. and
HELIO LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
17. Related Party Transactions (Continued)
Operating Company entered into an amendment to the CCBS Order (the "CCBS Amendment"). Aggregate fees under the CCBS Order and
CCBS Agreement were $14.1 million, of which $4.2 million, $5.7 million and $4.2 million were paid to SKT during the periods ended
December 31, 2005, 2006 and 2007, respectively. Services under the CCBS Order and CCBS Agreement commenced in August 2005 and were
principally being capitalized as equipment additions as prescribed under SOP 98-1. At December 31, 2006 and 2007, gross capitalized costs of
$14.1 million and $14.1 million, respectively, associated with the CCBS Order and CCBS Agreement were reflected in property and equipment
on the Company's balance sheets.
Effective May 2006, the Operating Company entered into a technical system support and services agreement with SKT whereby SKT
would provide technical and system operational support on CCBS beginning in May 2006 through December 2006 for an aggregate fee of
$1.7 million (the "May 2006 Agreement"). The aggregate $1.7 million in fees for services under the May 2006 Agreement are included in the
Company's statements of operations for the period ended December 31, 2006, of which $1.3 million and $0.4 million were paid to SKT during
the periods ended December 31, 2006 and 2007 respectively.
Effective August 2006, the Operating Company entered into a change request agreement with SKT whereby SKT expanded the scope of
technical functionality to the CCBS system under the then-existing Order, as amended, for an aggregate fee of $2.5 million (the "CCBS 1.0
Change Request"). The Company accounted for the CCBS 1.0 Change Request under SOP 98-1 and capitalized costs of $2.5 million were
included in property and equipment on the Company's balance sheet at December 31, 2006 and 2007, of which $2.5 million was paid to SKT
during the period ending December 31, 2007.
Effective August 2006, the Operating Company entered into a change request agreement with SKT whereby SKT expanded the scope of
technical functionality under the then-existing Wireless Internet Agreement for an aggregate fee of $5.9 million (the "Wireless Internet 1.0
Agreement"). Services under the Wireless Internet 1.0 Agreement were completed in December 2006. The Company accounted for the Wireless
Internet 1.0 Agreement under SOP 98-1 and FAS 86, whereby capitalized costs of $2.8 million were reflected in property and equipment on the
Company's balance sheet at December 31, 2006 and the remaining amount of $3.1 million was charged to expense during the year ended
December 31, 2006. $5.9 million was paid to SKT during the period ending December 31, 2007.
Effective August 2006, the Operating Company entered into a master services and software license agreement with an affiliate of SKT for
added functionality and enhancement around its original CCBS Agreement (the "CCBS 2.0 Agreement"). Aggregate fees under the CCBS 2.0
Agreement were $2.1 million and services began in September 2006 and continued into early 2007. The CCBS 2.0 Agreement was principally
being capitalized as equipment additions as prescribed under SOP 98-1. At December 31, 2006 and 2007 capitalized costs of $1.7 and
$2.1 million, respectively, associated with the CCBS 2.0 Agreement were included in property and equipment on the Company's balance sheets.
During the period ending December 31, 2007, $2.1 million of the CCBS 2.0 Agreement fees has been paid.
In December 2005, the Operating Company entered into a sales agreement with SKT authorizing SKT to serve as an agent of the Operating
Company for the purposes of selling wireless devices in Korea (the "SKT Bounty Agreement"). Under the SKT Bounty Agreement, SKT earns a
commission ranging from $50 to $125 for each device sold. Fees earned by SKT under the SKT Bounty Agreement were less than $0.1 million
in 2006 and $0.2 million in 2007.
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