UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 26, 2005
EARTHLINK, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | | 001-15605 | | 58-2511877 |
(State of Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
1375 Peachtree St., Atlanta, Georgia 30309
(Address of principal executive offices) (Zip Code)
(404) 815-0770
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report date)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement
On January 26, 2005, EarthLink, Inc. (“EarthLink”) and SK Telecom Co., Ltd. (“SKT”) announced a definitive agreement to form a joint venture to market wireless voice and data services in the U.S. The new entity, to be called SK-EarthLink and capitalized with $440 million of partner investments over the next three years, will be a non-facilities-based mobile virtual network operator (“MVNO”) offering mobile communications services and handsets to U.S. consumers.
EarthLink and SKT expect for the closing and initial financing of SK-EarthLink to occur in March 2005 and for SK-EarthLink’s operations to commence immediately thereafter.
Under the terms of the definitive agreement, EarthLink and SKT will each have a 50 percent voting and economic ownership interest in SK-EarthLink. The joint venture structure consists of two entities - a management company, SK-EarthLink Management Corp., and an operating company, SK-EarthLink LLC. The management company serves as the manager of the operating company, with the board of directors of the management company directing the operating company’s operations. Three members from each of EarthLink and SKT will comprise the board of directors.
Pursuant to SK-EarthLink’s Contribution and Formation Agreement, EarthLink will invest $43 million and contribute non-cash assets valued at $40 million, including customers, contractual arrangements and agreements to prospectively market SK-EarthLink’s services, at closing. EarthLink has committed to invest an aggregate of $220 million in SK-EarthLink over the next three years, including the $43 million of cash and $40 million of non-cash assets to be invested at closing.
EarthLink expects the use of cash for the formation of SK-EarthLink and the financing of SK-EarthLink’s near-term operations to adversely affect EarthLink’s cash position. In addition, EarthLink expects SK-EarthLink to incur losses due to the start-up nature of SK-EarthLink’s operations, and EarthLink will be required to include its proportionate share of the earnings (losses) of SK-EarthLink in its statements of operations, which would adversely affect EarthLink’s earnings and earnings per share. Lastly, EarthLink expects the transfer of wireless customers to SK-EarthLink to result in the revenues associated with the customers being recognized by SK-EarthLink rather than EarthLink.
In connection with Sky Dayton’s new role as chief executive officer of SK-EarthLink, Mr. Dayton will be stepping down as chairman of the board of directors of EarthLink but will remain a director of EarthLink. Robert M. Kavner will become the chairman of the board of directors of EarthLink.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant
See Item 1.01 which is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
The press release issued January 26, 2005 announcing a definitive agreement to form SK-EarthLink is incorporated herein by reference and is attached hereto as Exhibit 99.1.
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Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit
No. | | Description |
10.1 | | Contribution and Formation Agreement Among SK Telecom International, Inc., SK Telecom Co., Ltd. and EarthLink, Inc. |
10.2 | | Form of Operating Company Agreement of SK-EarthLink LLC |
10.3 | | Form of Certificate of Incorporation of SK-EarthLink Management Corp. |
10.4 | | Form of Bylaws of SK-EarthLink Management Corp. |
10.5 | | Form of Stockholders Agreement of SK-EarthLink Management Corp. |
99.1 | | Press release dated January 26, 2005 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EARTHLINK, INC. |
| (Registrant) |
| |
| By: | /s/ Kevin M. Dotts | |
| | Name: Kevin M. Dotts
Title: Chief Financial Officer |
Date: February 1, 2005
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Exhibit Index
Exhibit
No. | | Description |
10.1 | | Contribution and Formation Agreement Among SK Telecom International, Inc., SK Telecom Co., Ltd. and EarthLink, Inc. |
10.2 | | Form of Operating Company Agreement of SK-EarthLink LLC |
10.3 | | Form of Certificate of Incorporation of SK-EarthLink Management Corp. |
10.4 | | Form of Bylaws of SK-EarthLink Management Corp. |
10.5 | | Form of Stockholders Agreement of SK-EarthLink Management Corp. |
99.1 | | Press release dated January 26, 2005 |
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