Earthlink 2013 Annual Report Download - page 83
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Table of Contents EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Certain Risks and Concentrations
Credit Risk
. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and
cash equivalents, marketable securities and trade receivables. In addition, credit risk for the Company's cash equivalents and marketable
securities may be exacerbated by unfavorable economic conditions. If financial markets experience prolonged periods of decline, the value or
liquidity of the Company's cash equivalents and marketable securities could decline and result in an other-than-
temporary decline in fair value,
which could adversely affect the Company's financial position, results of operations and cash flows. The Company's investment policy limits
investments to investment grade instruments. As of December 31, 2013, the Company had no investments in marketable securities.
Accounts receivable are typically unsecured and are derived from revenues earned from customers primarily located in the U.S. Credit
risk with respect to trade receivables is limited because a large number of geographically diverse customers make up the customer base.
Additionally, the Company maintains allowances for potential credit losses. As of December 31, 2012 and 2013
, no customer accounted for
more than 10% of gross accounts receivable.
Supply Risk . The Company's business depends on the capacity, affordability, reliability and security of third-
party network service
providers. Only a small number of providers offer the network services the Company requires, and the majority of its network services are
currently purchased from a limited number of network service providers. Although management believes that alternate network providers could
be found in a timely manner, any disruption of these services could have a material adverse effect on the Company's financial position, results of
operations and cash flows.
Fair Value of Financial Instruments
The carrying amounts of the Company's cash, cash equivalents, trade receivables and trade payables approximate their fair values
because of their nature and respective durations. The Company's short- and long-
term investments in marketable securities as of December 31,
2012 consisted of available-for-sale securities that were carried at fair value.
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