Earthlink 2007 Annual Report Download - page 86

EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED—(Continued)
The following table summarizes the estimated fair value of the Company's investments in marketable securities designated as available-for-
sale classified by the maturity of the security:
Investments in Other Companies
As of December 31, 2006 and 2007, minority investments in other companies were $59.3 million and $62.9 million, respectively, and are
classified as investments in other companies in the Consolidated Balance Sheets. Minority investments in other companies as of December 31,
2006 and 2007 included $11.0 million and $10.0 million, respectively, of investments carried at cost, and $48.3 million and $52.9 million,
respectively, of investments recorded at fair value. As of December 31, 2006, gross unrealized losses were $6.5 million and there were no gross
unrealized gains. As of December 31, 2007, gross unrealized losses were $1.1 million and there were no gross unrealized gains.
In March 2006, the Company invested $50.0 million in Covad Communications Group, LLC ("Covad"), which consisted of 6.1 million
shares of Covad common stock for an aggregate purchase price of $10.0 million and $40.0 million aggregate principal amount of 12% Senior
Secured Convertible Notes due 2011 (the "Covad Notes"). The Company cannot exert significant influence over Covad's operating and financial
policies and, as such, accounts for its investment in Covad under the cost method of accounting and classifies the investment as available-for-
sale. The Company deferred $0.8 million of direct loan origination costs that are being recognized as a reduction in the effective yield over the
term of the Covad Notes.
In April 2006, the Company invested $10.0 million in Current Communications Group, LLC ("Current"), a privately-held broadband-over-
powerline provider. The Company accounts for its investment in Current under the cost method of accounting because the Company cannot exert
significant influence over Current's operating and financial policies.
During the year ended December 31, 2005, the Company received $4.4 million in cash distributions from eCompanies Venture Group, L.P.
("EVG"), a limited partnership that invested in domestic emerging Internet-related companies. In applying the cost method, EarthLink recorded
$0.6 million as a return of EarthLink's investment based on the carrying value of the investment, and the gain of $3.8 million was included in
gain (loss) on investments in other companies, net, in the Consolidated Statement of Operations for the year ended December 31, 2005. During
the years ended December 31, 2006 and 2007, the Company received $0.4 million and $1.6 million in cash distributions, respectively, from EVG
which were recorded as gains on investments in other companies in the Consolidated Statements of Operations.
During the years ended December 31, 2005 and 2007, the Company recognized losses due to other-than-temporary declines of the value of
investments of $0.9 million and $7.1 million, respectively. These losses are included in gain (loss) on investments in other companies, net, in the
Consolidated
80
As of December 31,
2006 2007
(in thousands)
Due within one year
$
214,947
$
93,204
Due after one year through two years
19,466
15,056
Due after two years through five years
1,994
6,508
$
236,407
$
114,768