##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, DC
    20549
   Form 10-K
  þ


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2005   Commission
    file number
    001-32588
   Covad Communications Group,
    Inc.
   Incorporated in
    Delaware

I.R.S. Employer Identification
    No.: 77-0461529   110 Rio
    Robles, San Jose, California 95134(408) 952-6400
  Securities registered pursuant to Section 12(b) of the
    Act:
    None
  Securities registered pursuant to Section 12(g) of the
    Act:
    Common Stock, par value $0.001 per share
    Stock Purchase Rights Pursuant To Rights Agreement
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K.  Yes þ o
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
    þ o




---



##### 



COVAD
    COMMUNICATIONS GROUP, INC.
    For the Fiscal Year Ended December 31, 2005
  
  TABLE OF
    CONTENTS
  PagePART IITEM 1.

Business


2ITEM 1A.

Risk Factors


15ITEM 1B.

Unresolved Staff
    comments


26ITEM 2.

Properties


26ITEM 3.

Legal
    Proceedings


26ITEM 4.

Submission of
    Matters to a Vote of Security Holders


28PART IIITEM 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


28ITEM 6.

Selected Financial
    Data


29ITEM 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


30ITEM 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


50ITEM 8.

Financial
    Statements and Supplementary Data


51ITEM 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


96ITEM 9A.

Controls and
    Procedures


96ITEM 9B.

Other
    Information


97PART IIIITEM 10.

Directors and
    Executive Officers of the Registrant


97ITEM 11.

Executive
    Compensation


97ITEM 12.

Security Ownership
    of Certain Beneficial Owners and Management


97ITEM 13.

Certain
    Relationships and Related Transactions


97ITEM 14.

Principal
    Accounting Fees and Services


97PART IVITEM 15.

Exhibits, Financial
    Statement Schedules


97SIGNATURES


102EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   1




---



##### Table of Contents



PART I  ITEM 1.
    Business  The following discussion contains forward-looking statements,
    including statements regarding our growth rates, cash needs, the
    adequacy of our cash reserves, relationships with customers and
    vendors, market opportunities, legislative and regulatory
    proceedings, operating and capital expenditures, expense
    reductions and operating results. Each of these statements
    involve risks and uncertainties. As a result, actual results
    could differ materially from those anticipated in the
    forward-looking statements as a result of certain factors
    including, but not limited to, those discussed in
    Part I. Item 1A. Risk Factors and
    elsewhere in this Report.
  We disclaim any obligation to update information contained in
    any forward-looking statement. See Part II.
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of
    Operations  Forward-Looking Statements.
  (All
    dollar and share amounts are presented in thousands, except per
    share amounts)
  Overview
  DS-1,
       2




---



##### Table of Contents



Industry
    Background
      Our
    Service Offerings
      TeleSpeed
    TeleSoho
   3




---



##### Table of Contents



TeleXtend
    TeleSurfer
      Broadband
    Wireless
    Voice
    over Internet Protocol for Businesses
   4




---



##### Table of Contents



Voice
    over Internet Protocol for Consumers
      Asynchronous
    Transfer Mode, or ATM, Network Services
  DS-3 DS-3
  Broadband
    Internet Access Service
    Value-Added
    Services
    TeleDefend:
  Email and Web Hosting: easy-to-use
  Installation Services.
 5




---



##### Table of Contents



Sales and
    Marketing
  Wholesale
          Direct
         6




---



##### Table of Contents



Network
    Architecture and Technology
    Consistent and Scalable Performance.
  Intelligent
    End-to-End
    Network Management.
  Flexibility.
  Network Operations Centers. end-to-end
  Nationwide Broadband Access and Internet
    Connectivity.
  Private Metropolitan Network.
  Central Office Spaces.
  Telephone Lines.
  Wireless Connections.
 7




---



##### Table of Contents



point-to-point
  DSL Modems and
    On-Site
    Connection. on-site
  Competition
    
    RBOCs (Verizon, BellSouth, Qwest and AT&T);
    cable television companies providing broadband access and VoIP,
    such as Comcast Corporation, Cox Communications, Time Warner,
    Inc. and Charter Communications;
    competitive telecommunications companies, such as DSL.net, Inc.,
    Mpower Communications Corporation and New Edge Networks, Inc
    (which recently agreed to be acquired by Earthlink);
    interexchange carriers including Sprint and Level 3
    Communications;
    VoIP service providers, such as M3, PingTone and cBeyond;
    telephone equipment providers such as Nortel, Avaya, Cisco and
    Lucent;
    Internet service providers, such as Earthlink and Speakeasy.net;
    online service providers, including include companies such as
    AOL, Google and MSN, a subsidiary of Microsoft Corp.; and
    wireless service providers such as Cingular Wireless, Sprint,
    Verizon,
    T-Mobile,
    StarBand Communications Inc., DirecTV, EchoStar
    Communications Corporation, Globalstar, Lockheed and Teledesic.  Wireless and Satellite Data Service
    Providers. point-to-point point-to-multi-point point-to-point
 8




---



##### Table of Contents



T-Mobile.
    Interconnection
    Agreements with the Regional Bell Operating Companies
      
    prices we pay to lease access, both for stand-alone and
    line-shared lines;
    special conditioning on certain of these lines to enable the
    transmission of digital signals;
    prices and terms of central office space for our equipment;
    prices we pay and access we have to data transport facilities
    connecting our facilities in different central offices and
    network points of presence;
    interfaces that we can use to place orders, report network
    problems and monitor responses to our requests;
    dispute resolution process we use to resolve
    disagreements; and
    terms of the interconnection agreement, its transferability to
    successors, its liability limits and other general aspects of
    the relationship.      Government
    Regulation
  Overview.
 9




---



##### Table of Contents



Recent Developments.
  
    If certain criteria are met, ILECs can stop providing new
    transport services between the telephone companies central
    offices at regulated rates, which are usually lower than
    commercially available rates. These criteria are based on the
    number of business lines served by the connected central offices
    and the number of alternative providers collocated in the
    central offices. This rule went into effect on
    March  11, 2005. For existing transport services where
    the criteria are met, ILECs are required to continue to provide
    the services with a price increase of 15% for either twelve or
    eighteen months after the order goes into effect. The twelve and
    eighteen month periods expire on March  11, 2006 and
    September 11, 2006, at which time commercially available
    rates will prevail. We currently purchase interoffice transport
    from the ILECs in order to carry traffic over our network. This
    change increased our data transport costs by approximately $869
    in 2005 and we expect it will increase our data transport costs
    in 2006 by approximately $6,069.
    In addition, ILECs are no longer required to provide new
    high-capacity unbundled
    DS-1 and
    DS-3 loops
    at regulated rates in locations where certain criteria are met.
    These criteria are based on the number of business lines served
    by the central office and the number of alternative providers
    collocated in the central office. This rule went into effect on
    March 11, 2005. For existing high-capacity
    DS-1 and
    DS-3 loops
    where the criteria are met, ILECs are required to continue to
    provide the loops for a twelve month transition period with a
    price increase of 15%. The transition period expires on
    March 11, 2006, at which time commercially available rates
    will prevail. We use
    DS-1 loops
    to provide business-grade services to our end-users. This change
    increased our cost to purchase
    DS-1 and
    DS-3 loops
    by approximately $1,139 in 2005 and we expect it will increase
    these costs in 2006 by approximately $1,634.
    ILECs are no longer required to provide new dark fiber loops at
    regulated rates. This rule went into effect on March 11,
    2005. For existing dark fiber loops, ILECs are required to
    continue to provide the dark fiber loops for a twelve month
    transition period with a price increase of 15%. The twelve month
    transition period ends on March 11, 2006, at which time
    commercially available rates will prevail. In certain areas, we
    purchase dark fiber to transport data traffic within our
    network. Currently we purchase our dark fiber from non-ILEC
    providers. However, if we are unable to purchase dark fiber from
    non-ILEC providers in the future, we expect this change will
    increase our cost to purchase dark fiber loops. At this time we
    cannot reliably quantify the aggregate amount of these
    increases, if any.
    Competitive telecommunications carriers, including our
    resellers, can no longer purchase voice services from the ILECs
    under an arrangement known as the Unbundled Network Element
    Platform, or UNE-P, for new customers at regulated rates. The
    existence of UNE-P had allowed us to bundle our data services
    with the voice services of competitive telecommunications
    providers through line-splitting arrangements. We currently only
    bundle services in this manner with competitive
    telecommunications providers that have agreements with the ILECs
    to allow them continued access to UNE-P or similar resold
    services. We are also exploring alternative methods of
    delivering residential voice services with which we and our
    resellers can package our data services. For example, as
    discussed above, we recently launched a market trial with
    Earthlink to test LPVA service that enables Earthlink to offer
    local and long distance voice services to its customers (bundled
    with our data services) in competition with the local telephone
    companies.     10




---



##### Table of Contents




    Our line-shared customers as of October 2, 2003 were
    grandfathered indefinitely at current rates, terms and
    conditions. These line-shared customers provided approximately
    $68,755 and $89,857, or 15.5% and 20.9%, of our revenues for the
    years ended December 31, 2005 and 2004, respectively.
    For line-shared customers acquired from October 3, 2003 to
    October 2, 2004, the FCC-mandated maximum price for the
    high-frequency portion of the telephone line was 25% of the cost
    of a separate telephone line during the first year, 50% of the
    cost of a separate telephone line from October 3, 2004 to
    October 2, 2005, and 75% of the cost of a separate
    telephone line from October 3, 2005 to October 2,
    2006. After October 2, 2006, we are required to transition
    these customers to new arrangements, which could include
    continued provision of services pursuant to commercial
    agreements.
    As of October 3, 2004, we cannot acquire new line-shared
    customers at regulated rates under Section 251 of the
    Telecommunications Act of 1996.       11




---



##### Table of Contents



Federal and State VoIP Regulation.
      Other Federal Regulation.
 12




---



##### Table of Contents



rights-of-way.
    Other State Regulation.
    Local Government Regulation.
 13




---



##### Table of Contents



Significant
    Customers
    Intellectual
    Property
         14




---



##### Table of Contents



Employees
    Available
    Information
  www.covad.com Form 10-K, Form 10-Q, Form 8-K, 1-800-SEC-0330. www.sec.gov.
  ITEM 1A.
    Risk
    Factors  Investing in and holding our common stock involve a degree of
    risk. Many factors, including those described below and set
    forth elsewhere in this report and in other documents we file
    with the SEC, could cause actual results to differ materially
    from the results contemplated by the forward-looking statements
    contained in this report. If any of these risk materialize, our
    business, financial condition and results of operations could
    suffer. These risks are not the only ones we face. Additional
    risks that we currently do not know about or that we currently
    believe to be immaterial may also impair our business.
  Our
    services are subject to government regulation, and changes in
    current or future laws or regulations and the methods of
    enforcing the law and regulations could adversely affect our
    business.
       15




---



##### Table of Contents



Charges
    for network elements are generally outside of our control
    because they are proposed by the ILECs and are subject to costly
    regulatory approval processes.
      Our
    business will be adversely affected if our interconnection
    agreements are not renewed or if they are modified on
    unfavorable terms.
        We
    depend on a limited number of customers for the preponderance of
    our revenues, and we are highly dependent on sales through our
    resellers.
   16




---



##### Table of Contents



The
    markets in which we operate are highly competitive, and we may
    not be able to compete effectively, especially against
    established industry competitors with significantly greater
    financial resources.
    
    develop and adopt new or emerging technologies;
    respond to changes in customer requirements more quickly;
    devote greater resources to the development, promotion and sale
    of their products and services;
    form new alliances and rapidly acquire significant market share;
    undertake more extensive marketing campaigns;
    adopt more aggressive pricing policies; and
    devote substantially more resources to developing new services.       17




---



##### Table of Contents



video-on-demand,
  New
    competitors in the market for VoIP services and improvements in
    the quality of VoIP service provided by competitors over the
    public Internet could increase competition for our VoIP
    services.
      Failure
    to complete development, testing and introduction of new
    services, including VoIP services, could affect our ability to
    compete in the industry.
    We may
    need to raise additional capital under difficult financial
    market conditions.
      
    customer disconnection rates that reduce our revenues;
    significant price reductions by our competitors;
    higher levels of marketing expense required to acquire and
    retain end-users that purchase our services from us and from our
    resellers;
    the need to upgrade our systems by investing in our existing and
    future technology and infrastructure;
    investment opportunities in complementary businesses,
    acquisitions or other opportunities; 18




---



##### Table of Contents




    changes in government regulations and legal actions challenging
    government regulations; and
    additional risk factors mentioned throughout this section.  10-year
    In
    order to become cash flow positive and to achieve profitability,
    we must add end-users and sell additional services to our
    existing end-users while minimizing the cost to expand our
    network infrastructure.
    
    acquire new end-users;
    enter into and maintain agreements with the RBOCs or obtain
    favorable regulatory rulings that provide us with access to
    unbundled network elements on terms and conditions that allow us
    to profitably sell our consumer services;
    enhance, improve and increase sales of our VoIP services;
    upgrade our network to improve reliability and remain
    competitive;
    efficiently deploy wireless services and integrate NextWeb;
    expand our direct sales capability and infrastructure in a
    cost-effective manner; and
    continue to implement and improve our management information
    systems, including our client ordering, provisioning, dispatch,
    trouble ticketing, customer billing, accounts receivable,
    payable tracking, collection, fixed assets, transaction-based
    taxes and other management information systems.    Our
    end-user disconnection rate reduces our revenue and end-user
    growth.
    
    move to a new location;
    disconnect because of better offers in the market; or
    disconnect because they do not like our service or the service
    provided by our resellers. 19




---



##### Table of Contents



We may
    experience decreasing margins on the sale of our services, which
    may impair our ability to achieve profitability or positive cash
    flow.
    If our
    internal controls over financial reporting do not comply with
    the requirements of the
    Sarbanes-Oxley
    Act, our business, reputation and stock price could be adversely
    affected.
      Some
    of our resellers are facing financial difficulties, which makes
    it more difficult to predict our revenues.
    The
    development of our direct business poses operational challenges
    and may cause our resellers to place fewer orders with us or may
    cause us to lose resellers.
    
    recruit, hire and train additional direct sales teams;
    reduce our cost of acquiring new customers;
    create effective automated systems to provision, manage and bill
    for VoIP services;
    manage expanding and increasingly diverse distribution channels; 20




---



##### Table of Contents




    effectively manage additional vendors; and
    continue to enhance our network and access products to provide
    business-class VoIP services.    The
    communications industry is undergoing rapid technological
    changes and new technologies may be superior to the technology
    we use.
    
    third parties, including some of our competitors and potential
    competitors, to develop and provide us with access to new
    communications and networking technology;
    our ability to anticipate or adapt to new technology on a timely
    basis; and
    our ability to adapt to new products and technologies that may
    be superior to, or may not be compatible with, our products and
    technologies.    A
    system failure could delay or interrupt service to our
    customers, which could reduce demand for our
    services.
    A
    breach of network security could delay or interrupt service to
    our customers, which could reduce demand for our
    services.
   21




---



##### Table of Contents



Our
    success depends on our retention of certain key personnel, our
    ability to hire additional key personnel and the maintenance of
    good labor relations.
      We
    depend on a limited number of third parties for equipment
    supply, software utilities, service and installation and if we
    are unable to obtain these items from these third parties we may
    not be able to deliver our services as required.
    
    DSLAMs;
    CPE, including modems, routers, bridges and other devices;
    network routing and switching hardware;
    customer support;
    installation services;
    customized software design and maintenance;
    network management software;
    systems management software;
    database management software;
    collocation space;
    software used in our products;
    hosting, email and IP provisioning services;
    softswitches, used to provide VoIP services; and
    Internet connectivity and Internet protocol services.      
    the possibility that some of our vendors will leave the DSL
    equipment business or will stop supporting equipment that we
    already have installed;
    the absence of guaranteed capacity;
    the possibility that software vendors will stop supporting
    software that we use; and
    reduced control over delivery schedules, quality assurance,
    production yields and costs.   22




---



##### Table of Contents



We use
    third-party vendors offshore for tasks that were previously done
    by our employees.
        We
    have made and may make acquisitions of complementary
    technologies or businesses in the future, which may disrupt our
    business and be dilutive to our existing
    stockholders.
       23




---



##### Table of Contents



We
    must pay federal, state and local taxes and other surcharges on
    our service, the applicability and levels of which are
    uncertain.
      We are
    a party to litigation and adverse results of such litigation
    matters could negatively impact our financial condition and
    results of operations.
    Our
    intellectual property protection may be inadequate to protect
    our proprietary rights.
        Third
    parties may claim we infringe their intellectual property
    rights.
   24




---



##### Table of Contents




    be time-consuming, costly and result in litigation;
    divert managements time and attention from developing our
    business;
    require us to pay monetary damages or enter into royalty and
    licensing agreements that we would not normally find acceptable;
    require us to stop selling or to redesign certain of our
    products; or
    require us to satisfy indemnification obligations to our
    customers.    The
    price of our common stock may continue to fluctuate
    significantly.
    
    state and federal regulatory and legislative actions;
    general economic conditions and the condition of the
    telecommunications industry;
    our ability to maintain existing customers and add new customers
    and recognize revenue from distressed customers;
    our ability to execute our operational plan and reach
    profitability and cash flow positive from operations;
    our ability to maintain sufficient liquidity to fund our
    operations;
    adverse litigation results;
    announcements of new products, services or pricing by our
    competitors or the emergence of new competing technologies;
    our failure to meet the expectations of investors or of analysts;
    the adoption of new, or changes in existing, accounting rules,
    guidelines and practices, which may materially impact our
    financial statements and may materially alter the expectations
    of securities analysts or investors;
    the level of demand for broadband Internet access services and
    VoIP telephony services;
    departures of key personnel; and
    effective internal controls over financial reporting.    Substantial
    leverage and debt service obligations may adversely affect our
    cash flow. (Refer to
    Item 7  Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Liquidity and Capital
    Resources for additional information)
   25




---



##### Table of Contents




    increasing our vulnerability to general adverse economic and
    industry conditions;
    limiting our ability to obtain additional financing;
    requiring the dedication of a portion of our expected cash flow
    from operations to service our indebtedness, thereby reducing
    the amount of our expected cash flow available for other
    purposes, including capital expenditures;
    limiting our flexibility in planning for, or reacting to,
    changes in our business and the industry in which we
    compete; and
    placing us at a possible competitive disadvantage relative to
    less leveraged competitors and competitors that have better
    access to capital resources.  ITEM 1B.
    Unresolved
    Staff Comments    ITEM 2.
    Properties  (All
    dollar amounts are presented in thousands)
      ITEM 3.
    Legal
    Proceedings  (All
    dollar amounts are presented in thousands)
       26




---



##### Table of Contents



27




---



##### Table of Contents



ITEM 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  ITEM 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Price Information and Dividend Policy for Our Common
    Stock
    High


LowFiscal Year Ending
    December 31, 2004First Quarter

$
4.16


$
1.84Second Quarter

$
2.58


$
1.62Third Quarter

$
2.36


$
1.27Fourth Quarter

$
2.34


$
1.45Fiscal Year Ending
    December 31, 2005First Quarter

$
2.26


$
1.20Second Quarter

$
1.49


$
1.07Third Quarter

$
1.50


$
1.06Fourth Quarter

$
1.10


$
0.67      28




---



##### Table of Contents



ITEM 6.
    Selected
    Financial Data  For the Year Ended
    December 31,2005


2004


2003


2002


2001(All dollar and share amounts
    are presented in thousands,except per share
    amounts)Consolidated Statement of
    Operations Data:Revenues, net

$
443,179


$
429,197


$
388,851


$
383,496


$
332,596Cost of sales (exclusive of
    depreciation and amortization)


311,139



266,172



288,122



298,336



461,875Selling, general and
    administrative


158,552



146,241



140,081



150,373



199,908Depreciation and amortization


67,241



77,410



73,884



127,088



150,839Provision for restructuring and
    post-employment benefits


3,640



1,409



1,235







14,364Provision for long-lived asset
    impairment


















11,988Loss from operations


(97,964
)


(60,000
)


(114,570
)


(180,992
)


(536,880
)Interest expense


5,005



4,927



5,526



5,581



92,782Gain on sale of equity securities


28,844















Gain on deconsolidation of
    subsidiary


53,963















Reorganization expenses, net


















62,620Gain on extinguishment of debt


















1,033,727Net income (loss)

$
(15,722
)

$
(60,761
)

$
(112,302
)

$
(184,828
)

$
344,758Basic and diluted per share
    amounts:Net income (loss)

$
(0.06
)

$
(0.24
)

$
(0.50
)

$
(0.84
)

$
1.94Weighted-average common shares
    used in computing basic and diluted per share amounts


265,240



249,187



224,950



219,744



177,347   As of
    December 31,2005


2004


2003


2002


2001Consolidated Balance Sheet
    Data:Cash, cash equivalents and
    short-term investments

$
96,501


$
150,996


$
114,345


$
202,492


$
283,863Property and equipment, net

$
71,663


$
78,707


$
94,279


$
108,737


$
215,804Total assets

$
300,581


$
385,225


$
334,711


$
442,161


$
675,168Long-term obligations, including
    capital leases

$
125,206


$
125,734


$
50,000


$
50,165


$
50,011Total stockholders equity
    (deficit)

$
(20,169
)

$
(8,635
)

$
(5,553
)

$
82,299


$
259,829   As of and for the Year Ended
    December 31,2005


2004


2003


2002


2001Other Operating and Financial
    DataCollocation facilities


2,052



2,052



1,819



1,802



1,718Homes and businesses passed
    (approximately)


57,000,000



50,000,000



46,000,000



46,000,000



40,000,000Lines in service


567,200



533,200



517,000



381,000



351,000Capital expenditures for property
    and equipment

$
42,397


$
38,743


$
44,142


$
22,782


$
15,732Capital expenditures for
    collocation fees and purchases of other intangibles assets

$
3,582


$
7,900


$
14,889


$
3,782


$
7,940  29




---



##### Table of Contents



ITEM 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation  (All
    dollar and share amounts are presented in thousands, except per
    share amounts)
  The following discussion of our financial condition and
    results of operations should be read in conjunction with the
    consolidated financial statements and the related notes thereto
    included elsewhere in this Annual Report on
    Form 10-K.
    This discussion contains forward-looking statements, the
    accuracy of which involves risks and uncertainties. Our actual
    results could differ materially from those anticipated in the
    forward-looking statements for many reasons including, but not
    limited to, those discussed in Part I. Item 1A.
    Risk Factors and elsewhere in this Annual Report on
    Form 10-K.
    We disclaim any obligation to update information contained in
    any forward-looking statement.
    See  Forward-Looking Statements.
  Overview
  Our
    Business
  DS-1,
        Regulatory
    Environment
   30




---



##### Table of Contents



Our
    Opportunities and Challenges
      Efficient use of cash
  Efficiently deliver broadband Internet access services to
    consumers
    Respond to Changes in Telecommunications
    Regulations
 31




---



##### Table of Contents



Enter and maintain acceptable line-sharing terms with the
    ILECs
  Expand and diversify our sources of
    revenue
  New market opportunities
  Recent
    Developments
    end-to-end
  Critical
    Accounting Policies and Estimates
   32




---



##### Table of Contents




    We recognize revenues when persuasive evidence of our
    arrangement with the customer exists, service has been provided
    to the customer, the price to the customer is fixed or
    determinable and collectibility of the sales price is reasonably
    assured. We recognize up-front fees associated with service
    activation over the expected term of the customer relationship,
    which is presently estimated to be twenty-four to forty-eight
    months using the straight-line method. Similarly, we treat the
    incremental direct costs of service activation, which consist
    principally of customer premises equipment, service activation
    fees paid to other telecommunications companies and sales
    commissions, as deferred charges in amounts no greater than the
    up-front fees that are deferred, and such incremental direct
    costs are amortized to expense using the straight-line method
    over a range of twenty-four to forty-eight months.
    We perform ongoing credit evaluations of our customers
    financial condition and maintain an allowance for estimated
    credit losses. In addition, we have billing and service disputes
    with some of our customers. These disputes arise in the ordinary
    course of business in the telecommunications industry and we
    believe that their impact on our accounts receivable and
    revenues can be reasonably estimated based on historical
    experience. In addition, certain customer revenues are subject
    to refund if the end-user terminates service within thirty days
    of service activation. Accordingly, we maintain allowances,
    through charges to revenues, based on our estimate of the
    ultimate resolution of these disputes and future service
    cancellations, and our reported revenue in any period could be
    different than what is reported if we employed different
    assumptions in estimating the outcomes of these items.
    We state our inventories at the lower of cost or market. In
    assessing the ultimate recoverability of inventories, we are
    required to make estimates regarding future customer demand.
    We record property and equipment and intangible assets at cost,
    subject to adjustments for impairment. We depreciate or amortize
    property and equipment and intangible assets using the
    straight-line method over their estimated useful lives. In
    assessing the recoverability of our property and equipment and
    intangible assets, we must make assumptions regarding estimated
    future cash flows and other factors to determine the fair value
    of the respective assets. If these estimates and assumptions
    change in the future, we may be required to record additional
    impairment charges relating to our property and equipment and
    intangible assets.
    We record goodwill when the consideration paid for an
    acquisition exceeds the fair value of net tangible and
    intangible assets acquired. We measure and test goodwill for
    impairment on an annual basis or more frequently if we believe
    indicators of impairment exists. The performance of the test
    involves a two-step process. The first step compares the fair
    value of the reporting unit to its carrying amount, including
    goodwill. The fair value of the reporting unit is determined by
    calculating the market capitalization of the reporting unit as
    derived from quoted market prices or other generally accepted
    valuation methods if quoted market prices are not available. A
    potential impairment exists if the fair value of the reporting
    unit is lower than its carrying amount. The second step of the
    process is only performed if a potential impairment exists, and
    it involves determining the difference between the fair values
    of the reporting units net assets, other than goodwill, to
    the fair value of the reporting unit. If the difference is less
    than the net book value of goodwill, impairment exists and is
    recorded.
    We are a party to a variety of legal proceedings, as either
    plaintiff or defendant, and are engaged in other disputes that
    arise in the ordinary course of business. We are required to
    assess the likelihood of any adverse judgments or outcomes to
    these matters, as well as potential ranges of probable losses
    for certain of these matters. The determination of the
    liabilities to be recognized, if any, for loss contingencies is
    made after analysis of each individual situation based on the
    facts and circumstances. However, it is reasonably possible that
    the liabilities reflected in our consolidated balance sheets for
    loss contingencies and business disputes 33




---



##### Table of Contents



could change in the near term due to new facts and
    circumstances, the effects of which could be material to our
    consolidated financial position and results of operations.  
    We perform on-going research and analysis of the applicability
    of transaction-based taxes to sales of our products and services
    and purchases of telecommunications circuits from various
    carriers. This research and analysis may include discussions
    with authorities of jurisdictions in which we do business and
    transaction-based tax experts to determine the extent of our
    transaction-based tax liabilities. We believe that these
    activities will be concluded without a material adverse effect
    on our consolidated financial position and results of
    operations. In addition, we continue to analyze the probable
    applicability of employment-related taxes for certain
    stock-based compensation provided to employees in prior periods.
    We believe that the analysis of the probable applicability of
    these taxes will be concluded without a material adverse effect
    to our consolidated financial position and results of
    operations. However, it is reasonably possible that our
    estimates of our transaction-based and employment-related tax
    liabilities could change in the near term, the effects of which
    could be material to our consolidated financial position and
    results of operations.
    We make market development funds, or MDF, available to certain
    customers for the reimbursement of co-branded advertising
    expenses and other purposes. To the extent that MDF is used by
    our customers for co-branded advertising, and the customers
    provide us with third-party evidence of such co-branded
    advertising and we can reasonably estimate the fair value of our
    portion of the advertising, such amounts are charged to
    advertising expense as incurred. Other MDF activities are
    recorded as reductions of revenues as incurred. Amounts payable
    to customers relating to rebates and customer incentives are
    recorded as reductions of revenues based on our estimate of
    sales incentives that will ultimately be claimed by customers.
    We account for income taxes using the liability method, under
    which deferred tax assets and liabilities are determined based
    on differences between the financial reporting and tax bases of
    our assets and liabilities. We record a valuation allowance on
    our deferred tax assets to arrive at an amount that is more
    likely than not to be realized. In the future, should we
    determine that we are able to realize all or part of our
    deferred tax assets, which presently are fully reserved, an
    adjustment to our deferred tax assets would increase income in
    the period in which the determination was made.
    We account for stock-based awards to employees using the
    intrinsic value method, and non-employees using the fair value
    method. Under the intrinsic value method, when the exercise
    price of our employee stock options equals or exceeds the market
    price of the underlying stock on the date of grant, we do not
    record compensation expense in our consolidated statement of
    operations.  Recent
    Accounting Pronouncements
   34




---



##### Table of Contents



conditional asset retirement obligation ,
  fair-value-based
   35




---



##### Table of Contents



Issue 03-6, Issue 03-6 No. D-95, Issue 03-6 Issue 03-6 Issue 03-6
  Results
    of Operations for 2005, 2004 and 2003
  Business
    Segment Information
   36




---



##### Table of Contents



Adjustments
    Revenues,
    net
  dial-up
  dial-up
 37




---



##### Table of Contents



dial-up
  Segment
    Revenues and Significant Customers
    Year Ended
    December 31,2005


2004


2003Wholesale

$
314,205


$
309,899


$
298,221Percent of net revenues


70.9
%


72.2
%


76.7
%Direct

$
128,974


$
119,298


$
90,630Percent of net revenues


29.1
%


27.8
%


23.3
%   dial-up
  dial-up
     38




---



##### Table of Contents



Wholesaler
    Financial Difficulties
    Operating
    Expenses
      Year Ended
    December 31,2005


2004


2003Amount

$
541,143


$
489,197


$
503,421Percent of net revenues


122.1
%


114.0
%


129.5
%   Cost of
    sales (exclusive of depreciation and amortization)
      Year Ended
    December 31,2005


2004


2003Amount

$
311,139


$
266,172


$
288,122Percent of net revenues


70.2
%


62.0
%


74.1
%    39




---



##### Table of Contents



Year Ended
    December 31,2005


2004


2003Wholesale Segment

$
193,721


$
177,115


$
209,334Direct Segment


81,521



57,141



46,124Corporate Operations


35,897



31,916



32,664Total

$
311,139


$
266,172


$
288,122    40




---



##### Table of Contents



Selling,
    General and Administrative Expenses
      Year Ended
    December 31,2005


2004


2003Amount

$
158,552


$
146,241


$
140,081Percent of net revenues


35.8
%


34.1
%


36.0
%    41




---



##### Table of Contents



Year Ended
    December 31,2005


2004


2003Wholesale Segment

$
8,353


$
9,048


$
13,069Direct Segment


49,938



36,859



20,346Corporate Operations


100,261



100,334



106,666Total

$
158,552


$
146,241


$
140,081    42




---



##### Table of Contents



Provision
    for Bad Debts (Bad Debt Recoveries)
    Depreciation
    and Amortization
        Provision
    for Restructuring and Post-Employment Benefits
   43




---



##### Table of Contents



Other
    Income (Expense)
  Net
    Interest Expense
    Gain on
    Deconsolidation of Subsidiary
    Investment
    Gain and Losses
      Miscellaneous
    Income, net
    Income
    Taxes
     44




---



##### Table of Contents



Related
    Party Transactions
      Liquidity,
    Capital Resources and Contractual Cash Obligations
   45




---



##### Table of Contents



Year Ended
    December 31,2005


2004


2003Net cash provided by (used in):Operating activities

$
(40,732
)

$
3,676


$
(45,553
)Investing activities


4,611



(29,780
)


8,508Financing activities


2,906



78,234



8,005Total

$
(33,215
)

$
52,130


$
(29,040
)   Operating
    Activities
      Investing
    Activities
   46




---



##### Table of Contents



Financing
    Activities
    Liquidity
        
    further development of our VoIP capabilities, including systems
    and software to expand and improve our VoIP services;
    our continuing ability to obtain access to ILEC facilities,
    including telephone lines, remote terminals, interoffice
    transport and high-capacity circuits, all at reasonable prices;
    rates at which resellers and end-users purchase and pay for our
    services and the pricing of such services;
    financial condition of our customers; 47




---



##### Table of Contents




    levels of marketing required to acquire and retain customers and
    to attain a competitive position in the marketplace;
    rates at which we invest in engineering, equipment, development
    and intellectual property with respect to existing and future
    technology;
    operational costs that we incur to install, maintain and repair
    end-user lines and our network as a whole;
    pending and any future litigation;
    existing and future technology, including wireless;
    unanticipated opportunities;
    network development schedules and associated costs; and
    number of regions entered and the timing of entry and services
    offered.  Contractual
    Cash Obligations
    2006


2007-2008


2009-2010


Thereafter


TotalNote payable to debentures

$



$



$
125,000


$



$
125,000Interest on note payable


3,750



7,500



781







12,031Capital leases


182



24











206Office leases


4,814



9,598



5,485



480



20,377Other operating leases


398



572



68







1,038Purchase obligations


7,181



6,300











13,481$
16,325


$
23,994


$
131,334


$
480


$
172,133              48




---



##### Table of Contents



Forward-Looking
    Statements
  Form 10-K
  
    impact of the federal, state and local telecommunications
    regulations, decisions and related litigation, and our ability
    to obtain ILEC network elements and facilities at reasonable
    rates;
    continuing deployment of LPVA and our ability to bundle our data
    services with the voice services of Earthlink and other
    alternative voice providers;
    timing of our cash flows;
    extent to which customers purchase our services;
    relationships with our strategic partners and other potential
    third parties;
    pricing for our services in the future;
    plans regarding new financing arrangements;
    margins on our service offerings;
    possibilities that we will increase our revenues;
    plans to make strategic investments and acquisitions and the
    effect of such investments and acquisitions;
    estimates and expectations of future operating results, the
    adequacy of our cash reserves, and the number of anticipated
    installed lines;
    plans to increase sales of value-added services, like VoIP;
    anticipated capital expenditures;
    plans to enter into business arrangements with broadband-related
    service providers;
    regulatory changes;
    feasibility of alternative access solutions, like wireless; 49




---



##### Table of Contents




    effects of litigation currently pending; and
    other statements contained in this Report on
    Form 10-K
    regarding matters that are not historical facts.    Form 10-K Form 10-K.
  ITEM 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  (All
    dollar amounts are presented in thousands)
      Carrying Value


Interest RateCash and cash equivalents

$
84,291



3.39
%Short-term investments in debt
    securities


12,210



0.48
%Restricted cash and cash
    equivalents


5,503



0.18
%$
102,004



4.05
%  50




---



##### Table of Contents



ITEM 8.
    Financial
    Statements and Supplementary Data  FINANCIAL
    STATEMENTS
  INDEX
  Form 10-K:
  Financial Statements.
  PageReport of
    PricewaterhouseCoopers LLP, Independent Registered Public
    Accounting Firm


52Report of
    Ernst & Young LLP, Independent Registered Public
    Accounting Firm


54Consolidated
    Balance Sheets


55Consolidated
    Statements of Operations


56Consolidated
    Statements of Stockholders Equity (Deficit)


57Consolidated
    Statements of Cash Flows


58Notes to
    Consolidated Financial Statements


59  51




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm       Consolidated
    financial statements
    Internal
    control over financial reporting
  Internal Control  Integrated
    Framework Internal Control  Integrated
    Framework
   52




---



##### Table of Contents



PricewaterhouseCoopers
    LLP
    53




---



##### Table of Contents



Report of
    Ernst and Young LLP, Independent Registered Public Accounting
    Firm                    54




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  CONSOLIDATED BALANCE SHEETS
  December 31,2005


2004(All dollar and share amounts
    are presented in thousands, except par value)ASSETSCurrent assets:Cash and cash equivalents

$
84,291


$
117,506Short-term investments in debt
    securities


12,210



33,490Restricted cash and cash equivalents


5,503



2,533Accounts receivable, net


28,074



30,041Unbilled revenues


3,326



3,825Inventories


5,245



4,629Prepaid expenses and other current
    assets


2,400



3,757Total current assets


141,049



195,781Property and equipment, net


71,663



78,707Collocation fees and other
    intangible assets, net


20,715



34,561Goodwill


36,626



36,626Deferred costs of service activation


25,456



30,152Deferred customer incentives, net


1,264



2,683Deferred debt issuance costs, net


3,223



4,231Other long-term assets


585



2,484Total assets

$
300,581


$
385,225LIABILITIES AND
    STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable

$
23,331


$
20,755Accrued compensation


16,277



15,619Accrued collocation and network
    service fees


14,583



24,160Accrued transaction-based taxes


30,159



33,730Collateralized and other customer
    deposits


33,230



7,906Unearned revenues


6,500



4,420Other accrued liabilities


9,137



10,127Total current liabilities


133,217



116,717Long-term debt


125,000



125,000Collateralized and other long-term
    customer deposits


16,912



44,444Deferred gain resulting from
    deconsolidation of subsidiary






53,963Unearned revenues


43,758



51,518Other long-term liabilities


1,863



2,218Total liabilities


320,750



393,860Commitments and contingencies
    (Notes 7, 8, 9 and 10)Stockholders
    deficit:Preferred stock, $0.001 par
    value; 5,000 shares authorized; no shares issued and
    outstanding at December 31, 2005 and 2004






Common stock, $0.001 par
    value; 590,000 shares authorized; 268,353 shares
    issued and outstanding at December 31, 2005
    (263,681 shares issued and outstanding at December 31,
    2004)


268



264Common
    stock  Class B, $0.001 par value;
    10,000 shares authorized; no shares issued and outstanding
    at December 31, 2005 and 2004






Additional paid-in capital


1,697,686



1,695,424Deferred stock-based compensation


(5
)


(939
)Accumulated other comprehensive
    income (loss)


3



(985
)Accumulated deficit


(1,718,121
)


(1,702,399
)Total stockholders deficit


(20,169
)


(8,635
)Total liabilities and
    stockholders deficit

$
300,581


$
385,225    55




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended
    December 31,2005


2004


2003(All dollar and share amounts
    are presented in thousands, exceptper share amounts)Revenues, net

$
443,179


$
429,197


$
388,851Operating expenses:Cost of sales (exclusive of
    depreciation and amortization)


311,139



266,172



288,122Selling, general and administrative


158,552



146,241



140,081Provision for bad debts (bad debt
    recoveries)


571



(2,035
)


99Depreciation and amortization of
    property and equipment


49,813



56,825



56,559Amortization of collocation fees
    and other intangible assets


17,428



20,585



17,325Provision for restructuring and
    post-employment benefits


3,640



1,409



1,235Total operating expenses


541,143



489,197



503,421Loss from operations


(97,964
)


(60,000
)


(114,570
)Other income (expense):Interest income


4,142



2,668



2,105Gain on sale of equity securities


28,844







Gain on deconsolidation of
    subsidiary


53,963







Provision for impairment of
    investments in unconsolidated affiliates










(747
)Equity in losses of unconsolidated
    affiliates










(279
)Interest expense


(5,005
)


(4,927
)


(5,526
)Miscellaneous income, net


298



1,498



6,715Other income (expense), net


82,242



(761
)


2,268Net loss

$
(15,722
)

$
(60,761
)

$
(112,302
)Basic and diluted net loss per
    share

$
(0.06
)

$
(0.24
)

$
(0.50
)Weighted-average number of common
    shares outstanding used in computing basis and diluted per share
    amounts


265,240



249,187



224,950    56




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY (DEFICIT)
  AccumulatedOther





TotalAdditional


Deferred


Comprehensive





StockholdersPreferred Stock


Common Stock


Paid-In


Stock-Based


Income


Accumulated


EquityShares


Amount


Shares


Amount


Capital


Compensation


(Loss)


Deficit


(Deficit)(All dollar and share amounts
    are presented in thousands)Balances at December 31,
    2002





$




223,183


$
223


$
1,612,319


$
(160
)

$
(747
)

$
(1,529,336
)

$
82,299Net loss






























(112,302
)


(112,302
)Unrealized losses on
    available-for-sale
    securities


























(206
)






(206
)Comprehensive loss


































(112,508
)Issuance of common stock










1,996



2



1,721















1,723Issuance of common stock upon
    exercise of options










4,984



5



6,453















6,458Issuance of warrants


















2,640















2,640Stock-based compensation


















1,356















1,356Deferred stock-based compensation


















26,778



(26,778
)










Amortization (reversal) of deferred
    stock-based compensation






















12,479











12,479Balances at December 31,
    2003










230,163



230



1,651,267



(14,459
)


(953
)


(1,641,638
)


(5,553
)Net loss






























(60,761
)


(60,761
)Unrealized losses on
    available-for-sale
    securities


























(32
)






(32
)Comprehensive loss


































(60,793
)Issuance of common stock










5,316



5



4,722















4,727Issuance of common stock upon
    exercise of options










1,951



2



2,149















2,151Issuance of common stock for
    bankruptcy filing related transactions










6,496



7



6,944















6,951Issuance of common stock for
    business acquisition expenses










834



1



1,780















1,781Issuance of common stock to vendors










8







13















13Issuance of common stock for
    business acquisition










18,724



19



39,345















39,364Issuance of restricted stock










189







660



(660
)










Amortization (reversal) of
    stock-based compensation


















(11,456
)


14,180











2,724Balances at December 31,
    2004










263,681



264



1,695,424



(939
)


(985
)


(1,702,399
)


(8,635
)Net loss






























(15,722
)


(15,722
)Unrealized gains on
    available-for-sale
    securities


























26







26Foreign currency translation
    adjustment


























962







962Comprehensive loss


































(14,734
)Issuance of common stock










3,898



3



3,384















3,387Issuance of common stock upon
    exercise of options










774



1



620















621Amortization (reversal) of
    stock-based compensation


















(1,742
)


934











(808
)Balances at December 31,
    2005





$




268,353


$
268


$
1,697,686


$
(5
)

$
3


$
(1,718,121
)

$
(20,169
)    57




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended
    December 31,2005


2004


2003(All dollar amounts arepresented in
    thousands)Operating Activities:Net loss

$
(15,722
)

$
(60,761
)

$
(112,302
)Adjustments to reconcile net loss
    to net cash provided by (used in) operating activities:Provision for bad debts (bad debt
    recoveries), net


571



(2,035
)


99Depreciation and amortization


67,241



77,410



73,884Loss on disposition of property and
    equipment


53



669



112Amortization (reversal) of deferred
    stock-based compensation, net


(808
)


2,724



12,479Amortization of deferred customer
    incentives


1,419



1,749



Other stock-based compensation






13



1,367Other non-cash charges


1,008



809



1,749Accretion of interest on
    investments, net


(408
)


(716
)


(1,090
)Gain on sale of equity securities


(28,844
)






Gain on deconsolidation of
    subsidiary


(53,963
)






Provision for impairment of
    investments in unconsolidated affiliates










747Equity in losses of unconsolidated
    affiliates










279Miscellaneous income from
    internal-use software license royalties










(5,606
)Net changes in operating assets and
    liabilities, net of assets acquired and liabilities assumed in
    purchase acquisition:Restricted cash and cash equivalents










(316
)Accounts receivable


1,396



1,055



(6,881
)Unbilled revenues


499



1,302



(1,206
)Inventories


(616
)


730



(239
)Prepaid expenses and other current
    assets


1,364



741



1,995Deferred costs of service activation


4,696



1,334



8,800Accounts payable


2,576



4,407



2,067Collateralized and other customer
    deposits


(2,208
)


(7,908
)


(7,933
)Other current liabilities


(13,306
)


(12,059
)


(1,469
)Unearned revenues


(5,680
)


(5,788
)


(12,089
)Net cash provided by (used in)
    operating activities


(40,732
)


3,676



(45,553
)Investing Activities:Restricted cash and cash
    equivalents, net


(2,970
)


359



Purchase of short-term investments
    in debt securities


(43,835
)


(144,105
)


(131,903
)Maturities of short-term
    investments in debt securities


65,548



160,268



191,894Proceeds from the sale of equity
    securities


29,807







Purchase of property and equipment


(42,397
)


(38,743
)


(44,142
)Proceeds from sale of property and
    equipment


141



115



181Recovery of internal-use software
    costs










7,345Payment of collocation fees and
    purchase of other intangible assets


(3,582
)


(7,900
)


(14,889
)Cash acquired through acquisition






107



Acquisition costs






(473
)


Decrease in other long-term assets


1,899



592



22Net cash provided by (used in)
    investing activities


4,611



(29,780
)


8,508Financing Activities:Proceeds from the issuance of
    senior unsecured convertible debentures, net






119,961



Principal payments of long-term debt






(50,000
)


Principal payments under capital
    lease obligations


(1,102
)


(386
)


(165
)Proceeds from the issuance of
    common stock


4,008



6,878



8,170Proceeds from the issuance of
    common stock related to acquisition






1,781



Net cash provided by financing
    activities


2,906



78,234



8,005Net increase (decrease) in cash and
    cash equivalents


(33,215
)


52,130



(29,040
)Cash and cash equivalents at
    beginning of year


117,506



65,376



94,416Cash and cash equivalents at end of
    year

$
84,291


$
117,506


$
65,376Supplemental Disclosures of Cash
    Flow Information:Cash paid during the year for
    interest

$
3,831


$
8,535


$
5,510Supplemental Schedule of
    Non-Cash Investing and Financing Activities:Equipment purchased through capital
    leases

$
573


$
959


$
Common stock issued in settlement
    of claims related to bankruptcy

$



$
6,951


$
Common stock, options, and warrants
    issued for acquisition of business

$



$
39,364


$
    58




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSYears Ended December 31, 2005, 2004 and 2003
    (All dollar and share amounts are presented in thousands, except
    per share amounts)
  1.
    Nature of
    Operations and Summary of Significant Accounting
    Policies  Organization,
    Business and Basis of Presentation
  Organization
    and Business
  DS-1,
      Basis of
    Presentation
   59




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Adjustments
    Summary
    of Significant Accounting Policies
  Use of
    Estimates
    Cash
    Equivalents and Short-Term Investments
  available-for-sale available-for-sale available-for-sale
    December 31, 2005Gross


GrossAmortized


Unrealized


UnrealizedCost


Gains


Losses


Fair ValueU.S. Government agency
    securities

$
6,486


$



$
(5
)

$
6,481Agency discount note


497











497Commercial paper


5,231



1







5,232Total
    available-for-sale
    securities

$
12,214


$
1


$
(5
)

$
12,210  60




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   December 31, 2004Gross


GrossAmortized


Unrealized


UnrealizedCost


Gains


Losses


Fair ValueU.S. Government agency
    securities

$
21,952


$



$
(22
)

$
21,930Commercial paper


11,564







(4
)


11,560Total
    available-for-sale
    securities

$
33,516


$



$
(26
)

$
33,490   available-for-sale
  available-for-sale
  Year EndedDecember 31,2005


2004


2003Total gains

$
28,844


$



$
   Restricted
    Cash and Cash Equivalents
    Other
    Investments
      Concentrations
    of Credit Risk, Significant Customer and, Key
    Suppliers
     61




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Related
    Parties
      Inventories
  first-in,
  Property
    and Equipment
    Leasehold improvements

5 years or the term of the
    lease, whichever is lessComputer equipment

2 to 5 yearsComputer software

3 to 5 yearsFurniture and fixtures

2 to 5 yearsNetworks and communication
    equipment

2 to 5 years    62




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Collocation
    Fees and Other Intangible Assets
        2006

$
8,0192007

$
6,3542008

$
4,4792009

$
1,5212010

$
342   Changes
    in Accounting Estimates
     63




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Impairment
    of Long-lived Assets
      Stock-Based
    Compensation
      2005


2004


2003Net loss, as reported

$
(15,722
)

$
(60,761
)

$
(112,302
)Stock-based employee compensation
    expense (reversal) included in the determination of net loss, as
    reported


(808
)


2,724



13,715Stock-based employee compensation
    expense that would have been included in the determination of
    net loss if the fair value method had been applied to all awards


(19,767
)


(21,593
)


(20,507
)Pro forma net loss

$
(36,297
)

$
(79,630
)

$
(119,094
)Basic and diluted net loss per
    common share:As reported

$
(0.06
)

$
(0.24
)

$
(0.50
)Pro forma

$
(0.14
)

$
(0.32
)

$
(0.53
)    64




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   out-of-the-money
        Advertising
    Costs
      Legal
    Costs
   65




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Income
    Taxes
    Fair
    Values of Financial Instruments
    Cash, Cash Equivalents, Short-Term Investments and Restricted
    Cash and Cash Equivalents.
  Borrowings.
  Foreign
    Currency
    Net Loss
    Per Share
     66




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ended
    December 31,2005


2004


2003Weighted-average shares of common
    stock outstanding


265,261



249,295



224,950Less weighted-average shares of
    common stock subject to repurchase


21



108



Weighted-average common shares
    used in computing basic and dilutive net loss per share amounts


265,240



249,187



224,950       Comprehensive
    Loss
    Cumulative


Year Ended
    December 31,Amounts


2005


2004


2003Net loss

$
(1,718,121
)

$
(15,722
)

$
(60,761
)

$
(112,302
)Unrealized gains (losses) on
    available-for-sale
    securities


3



26



(32
)


(206
)Foreign currency translation
    adjustment






962







Comprehensive loss

$
(1,718,118
)

$
(14,734
)

$
(60,793
)

$
(112,508
)   Goodwill
     67




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Acquisition of GoBeam.
  Collateralized
    and Other Customer Deposits
  10-year Revenue Recognition,
  Revenue
    Recognition,
  Post-Employment
    Benefits
   68




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Recent
    Accounting Pronouncements
    conditional asset
    retirement obligation ,
  fair-value-based
 69




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             70




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Issue 03-6, Issue 03-6 No. D-95, Issue 03-6 Issue 03-6
  Risks and
    Uncertainties
    
    changes in government policy, regulation and enforcement or
    adverse judicial or administrative interpretations and rulings
    or legislative action relating to regulations, enforcement and
    pricing, including, but not limited to, changes that affect the
    continued availability of the unbundled network elements of the
    local exchange carriers network and the costs associated
    therewith;
    dependence on the availability and functionality of the networks
    of the incumbent local exchange carriers;
    increased price competition in local and long distance services,
    including bundled services, and overall competition within the
    telecommunications industry; and
    adverse determinations in certain litigation matters.    2.
    Revenue
    Recognition   71




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            December 31,2005


2004Gross accounts receivable

$
31,398


$
31,607Allowance for service credits


(2,838
)


(1,405
)Allowance for bad debts


(486
)


(161
)Accounts receivable, net

$
28,074


$
30,041     December 31,2005


2004


2003Allowance for service
    credits:Balance at beginning of period

$
1,405


$
2,124


$
2,077Provision


9,333



4,914



2,886Write-offs


(7,330
)


(5,136
)


(1,557
)Recoveries


(570
)


(497
)


(1,282
)Balance at end of period

$
2,838


$
1,405


$
2,124  72




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   December 31,2005


2004


2003Allowance for bad
    debts:Balance at beginning of period

$
161


$
2,750


$
3,311Provision


800



487



275Write-offs


(329
)


(1,051
)


(462
)Recoveries


(146
)


(2,025
)


(374
)Balance at end of period

$
486


$
161


$
2,750   Significant
    Customers
      Wholesaler
    Financial Difficulties
     73




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    3.
    Restructuring  Reduction
    in Force
    Other
    Restructuring Activities
       74




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Property
    and Equipment    December 31,2005


2004Leasehold improvements

$
10,880


$
10,239Computer equipment


50,797



53,045Computer software


57,362



47,291Furniture and fixtures


16,268



17,303Network and communication equipment


403,071



380,559538,378



508,437Less accumulated depreciation and
    amortization


466,715



429,730Property and equipment, net

$
71,663


$
78,707   5.
    Collocation
    Fees and Other Intangibles Assets    December 31,2005


2004Collocation fees

$
97,243


$
93,665Customer lists and other
    intangibles assets


10,470



10,470107,713



104,135Less accumulated amortization


86,998



69,574Collocation fees and other
    intangibles assets, net

$
20,715


$
34,561   6.
    Business
    Acquisition, Asset Acquisitions and Equity Investments  Acquisition
    of GoBeam
       75




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Total purchase cost:Value of common shares issued

$
38,910Value of assumed GoBeam options
    and warrants


45439,364Acquisition costs


473Total purchase cost

$
39,837Purchase price allocation:Tangible net liabilities acquired

$
(4,479
)Intangible assets acquired:Customer relationships


6,600Internal use software


1,090Goodwill


36,626Total purchase consideration

$
39,837            76




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended
    December 31,2004


2003Revenue

$
432,148


$
393,257Net loss

$
(68,331
)

$
(124,538
)Basic and diluted net loss per
    share

$
(0.27
)

$
(0.51
)       Acquisition
    of Qwest Customer List
      Unconsolidated
    Investments in Affiliates
    Ownership





InvestmentPercentage


Method of


Carrying ValueEntity Name

Date of Investment(s)

2005


2004


Accounting


2005


2004ACCA Networks Co., Ltd.

August 2000






10%



Equity







Certive Corporation

November 1999; May 2000


0.01
%


2%



Equity







  77




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   ACCA
    Networks Co., Ltd.
    paid-up
    Certive
    Corporation
    7.
    Credit
    Arrangements   78




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Form S-3
    8.
    Capital
    Leases    9.
    Operating
    Leases, Commitments and Purchase Obligations  Operating
    Leases
    Gross Lease


Less Sublease


Net LeasePayments


Payments


PaymentsYear ending December 31,2006

$
5,212


$
57


$
5,1552007


5,131



30



5,1012008


5,039







5,0392009


3,450







3,4502010


2,103







2,103Thereafter


480







480Total

$
21,415


$
87


$
21,328   Commitments
   79




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           Purchase
    Obligations
      Year ending December 31,2006

$
7,1812007


6,300Total

$
13,481     10.
    Contingencies  Litigation
     80




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              81




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Other
    Contingencies
   82




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Indemnification
    Agreements
   83




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     11.
    Stockholders
    Equity  Strategic
    Investors
  10-year 10-year
  Common
    Stock
      Bankruptcy claims


583Outstanding options


24,973Options available for grant


16,818Employee stock purchase plan


3,670Convertible debentures


39,380Outstanding warrants


6,514Total


91,938   Stockholder
    Protection Rights Plan
    Warrants
   84




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        12.
    Income
    Taxes      Year Ended
    December 31,2005


2004


2003Federal benefit at statutory rate

$
(5,503
)

$
(21,266
)

$
(39,306
)State benefit, net of federal
    benefit


(786
)


(3,038
)


(4,829
)Net operating losses with no
    current benefits


5,931



22,290



38,636Deferred variable stock-based
    compensation


(364
)


1,099



4,330Other


722



915



1,169Income tax expense (benefit)

$



$



$
  85




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,2005


2004Deferred tax assets:Net operating loss carryforwards

$
413,209


$
370,489Capital loss carryforwards


3,582



10,810Deferred and unearned revenue


31,610



32,259Deconsolidation of subsidiary






21,585Unconsolidated investments in
    affiliates


2,030



6,725Depreciation and amortization


41,655



43,241Other


11,229



12,891Total deferred tax assets


503,315



498,000Deferred tax liabilities


(1,821
)


(2,628
)Net deferred tax assets


501,494



495,372Valuation allowance


(501,494
)


(495,372
)Net deferred taxes

$



$
          86




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         13.
    Employee
    Benefit Plans  Defined
    Contribution Plan
      1998
    Employee Stock Purchase Plan
    2003
    Employee Stock Purchase Plan
       87




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Option Plans
    out-of-the-money
       88




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Number of Shares of


Option Price perCommon Stock


ShareBalance as of December 31,
    2002


25,675


$
0.001 - $149.79Granted


7,196


$
0.570  - $  5.53Exercised


(4,984
)

$
0.001 - $  5.44Cancelled


(6,210
)

$
0.296 - $149.79Balance as of December 31,
    2003


21,677


$
0.001 - $149.79Granted


6,867


$
1.460 - $  3.51Exercised


(1,951
)

$
0.001 - $  3.72Cancelled


(3,596
)

$
0.001 - $149.79Balance as of December 31,
    2004


22,997


$
0.001 - $149.79Granted and assumed


7,162


$
0.730 - $  1.69Exercised


(774
)

$
0.296 - $  2.16Cancelled


(4,412
)

$
0.022 - $149.79Balance as of December 31,
    2005


24,973


$
0.001 - $149.79     Options Outstanding


Options ExercisableNumber of


Weighted-Average


Weighted-Average


Number of


Weighted-AverageExercise Price Range

Shares


Life Remaining


Exercise Price


Shares


Exercise Price$0.001 - $  0.67


1,863



3.66


$
0.55



1,856


$
0.55$ 0.68 - $  0.84


2,645



3.81



0.83



2,454



0.83$ 0.86 - $  1.17


1,282



6.14



1.06



649



1.10$ 1.18 - $  1.28


3,759



5.54



1.27



2,543



1.28$ 1.29 - $  2.25


6,541



6.54



1.58



6,348



1.59$ 2.28 - $  2.56


2,248



3.52



2.53



2,248



2.53$ 2.59 - $  3.31


183



4.06



3.08



183



3.08$ 3.34 - $  3.34


3,415



6.16



3.34



3,415



3.34$ 3.51 - $ 30.04


1,938



2.69



16.90



1,938



16.90$30.67 - $149.79


1,099



1.88



48.82



1,099



48.82$0.001 - $149.79


24,973



5.02


$
4.96



22,733


$
5.33      89




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Pro
    forma Stock-Based Compensation Information
          Stock Options


Employee Stock Purchase
    Plan2005


2004


2003


2005


2004


2003Expected life of options in years


4.0



4.0



4.0



0.5



0.5



0.5Volatility


91.07
%


123.70
%


131.70
%


91.07
%


123.70
%


131.70
%Risk-free interest rate


4.34
%


3.27
%


2.10
%


4.35
%


2.61
%


1.08
%Expected dividend yield


0.00
%


0.00
%


0.00
%


0.00
%


0.00
%


0.00
%   14.
    Business
    Segments     90




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       91




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Total


Corporate


ConsolidatedWholesale


Direct


Segments


Operations


TotalAs of and for the year ended
    December 31, 2005:Revenue, net

$
314,205


$
128,974


$
443,179


$



$
443,179Intersegment revenues


















Total revenues, net


314,205



128,974



443,179







443,179Cost of sales (exclusive of
    depreciation and amortization)


193,721



81,521



275,242



35,897



311,139Selling, general and administrative


8,353



49,938



58,291



100,261



158,552Provision for bad debts














571



571Depreciation and amortization














49,813



49,813Amortization of intangible assets














17,428



17,428Provision for restructuring and
    post-employment benefits


285



397



682



2,958



3,640Total operating expenses


202,359



131,856



334,215



206,928



541,143Income (loss) from operations


111,846



(2,882
)


108,964



(206,928
)


(97,964
)Interest income














4,142



4,142Gain on sale of equity securities














28,844



28,844Gain on deconsolidation of
    subsidiary














53,963



53,963Interest expense














(5,005
)


(5,005
)Miscellaneous income, net














298



298Total other income, net














82,242



82,242Net income (loss)

$
111,846


$
(2,882
)

$
108,964


$
(124,686
)

$
(15,722
)Assets

$
38,725


$
19,395


$
58,120


$
242,461


$
300,581Capital expenditures for property
    and equipment

$



$



$



$
42,397


$
42,397Payment of collocation fees and
    purchase of other intangible assets

$



$



$



$
3,582


$
3,582   92




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Total


Corporate


ConsolidatedWholesale


Direct


Segments


Operations


TotalAs of and for the year ended
    December 31, 2004:Revenue, net

$
309,899


$
119,298


$
429,197


$



$
429,197Intersegment revenues


















Total revenues, net


309,899



119,298



429,197







429,197Cost of sales (exclusive of
    depreciation and amortization)


177,115



57,141



234,256



31,916



266,172Selling, general and administrative


9,048



36,859



45,907



100,334



146,241Provision for bad debt recoveries














(2,035
)


(2,035
)Depreciation and amortization














56,825



56,825Amortization of intangible assets














20,585



20,585Provision for restructuring and
    post-employment benefits


374



281



655



754



1,409Total operating expenses


186,537



94,281



280,818



208,379



489,197Income (loss) from operations


123,362



25,017



148,379



(208,379
)


(60,000
)Interest income














2,668



2,668Interest expense














(4,927
)


(4,927
)Miscellaneous income, net














1,498



1,498Total other expense, net














(761
)


(761
)Net income (loss)

$
123,362


$
25,017


$
148,379


$
(209,140
)

$
(60,761
)Assets

$
47,994


$
18,707


$
66,701


$
318,524


$
385,225Capital expenditures for property
    and equipment

$



$



$



$
38,743


$
38,743Payment of collocation fees and
    purchase of other intangible assets

$



$



$



$
7,900


$
7,900   93




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Total


Corporate


ConsolidatedWholesale


Direct


Segments


Operations


TotalAs of and for the year ended
    December 31, 2003:Revenue, net

$
298,221


$
90,630


$
388,851


$



$
388,851Intersegment revenues


















Total revenues, net


298,221



90,630



388,851







388,851Cost of sales (exclusive of
    depreciation and amortization)


209,334



46,124



255,458



32,664



288,122Selling, general and administrative


13,069



20,346



33,415



106,666



140,081Provision for bad debts














99



99Depreciation and amortization














56,559



56,559Amortization of intangible assets














17,325



17,325Provision for restructuring and
    post-employment benefits


103



349



452



783



1,235Total operating expenses


222,506



66,819



289,325



214,096



503,421Income (loss) from operations


75,715



23,811



99,526



(214,096
)


(114,570
)Interest income














2,105



2,105Provision for impairment of
    investment in unconsolidated affiliates














(747
)


(747
)Equity in losses of unconsolidated
    affiliates














(279
)


(279
)Interest expense














(5,526
)


(5,526
)Miscellaneous income, net














6,715



6,715Total other income, net














2,268



2,268Net income (loss)

$
75,715


$
23,811


$
99,526


$
(211,828
)

$
(112,302
)Assets

$
52,210


$
17,362


$
69,572


$
265,139


$
334,711Capital expenditures for property
    and equipment

$



$



$



$
44,142


$
44,142Payment of collocation fees and
    purchase of other intangible assets

$



$



$



$
14,889


$
14,889     15.
    Subsequent
    events     94




---



##### Table of Contents



COVAD
    COMMUNICATIONS GROUP, INC.
  SUPPLEMENTARY
    DATA
  Selected
    Quarterly Financial Information (Unaudited)
    Three Months EndedMarch 31


June 30


September 30


December 312005:Revenues, net

$
107,718


$
109,741


$
112,069


$
113,651Gross profit (exclusive of
    depreciation and amortization)

$
34,969


$
33,501


$
27,572


$
35,998Depreciation and amortization

$
19,149


$
17,626


$
16,038


$
14,428Net income (loss)

$
34,374


$
(16,403
)

$
(15,805
)

$
(17,888
)Earnings (loss) per common share:Basic

$
0.13


$
(0.06
)

$
(0.06
)

$
(0.07
)Diluted

$
0.11


$
(0.06
)

$
(0.06
)

$
(0.07
)2004:Revenues, net

$
108,477


$
107,326


$
105,687


$
107,707Gross profit (exclusive of
    depreciation and amortization)

$
40,183


$
44,578


$
39,748


$
38,516Depreciation and amortization

$
19,246


$
19,204


$
19,406


$
19,554Net loss

$
(13,531
)

$
(7,406
)

$
(13,804
)

$
(26,020
)Basic and diluted net loss per
    share

$
(0.06
)

$
(0.03
)

$
(0.05
)

$
(0.10
)    95




---



##### Table of Contents



ITEM 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure  Form 8-K,
    ITEM 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures:
      Managements
    Report on Internal Control over Financial Reporting:
  Rule 13a-15(f)
  Internal
    Control  Integrated Framework.
  Internal Control  Integrated Framework.
    Changes
    in Internal Control over Financial Reporting:
   96




---



##### Table of Contents



ITEM 9B.
    Other
    Information  Form 8-K
 PART III  ITEM 10.
    Directors
    and Executive Officers of the Registrant    ITEM 11.
    Executive
    Compensation    ITEM 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    ITEM 13.
    Certain
    Relationships and Related Transactions    ITEM 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  Form 10-K:
  Financial Statements.
                Financial Statement
    Schedules.
 97




---



##### Table of Contents



Exhibits. Form 10-K.
  EXHIBIT INDEX
  ExhibitNumber

Description2
.1(1)

Plan: First Amended Plan of
    Reorganization, as Modified, of Covad Communications Group, Inc.
    dated November 26, 2001.2
.2(2)

Order Pursuant to
    Section 1129 of the Bankruptcy Code Confirming the
    Debtors First Amended Chapter 11 Plan of
    Reorganization, as Modified (Docket No. 214).2
.3(3)

Agreement and Plan of Merger,
    dated as of March 2, 2004, among Covad Communications
    Group, Inc., Covad Communications Investment Corp., GoBeam, Inc.
    and Eduardo Briceno, as Representative.2
.4(4)

Agreement and Plan of Merger,
    dated as of October 4, 2005, among Covad Communications
    Group, Inc., Windtalker Acquisition Corp., NextWeb, Inc.
    and Ghia Griarte as Representative.3
.1(5)

Amended and Restated Certificate
    of Incorporation.3
.2(6)

Certificate of Amendment of
    Certificate of Incorporation of the Registrant filed on
    July 14, 2000.3
.3(7)

Certificate of Amendment of
    Certificate of Incorporation of the Registrant filed on
    December 20, 2001.3
.4(8)

Amended and Restated Bylaws, as
    currently in effect.4
.1(9)

Indenture, dated as of
    March 10, 2004 between the Registrant and The Bank of New
    York, as Trustee.4
.2(9)

Resale Registration Rights
    Agreement, dated as of March 10, 2004 among the Registrant
    and Banc of America Securities LLC.4
.3(9)

Form of Debenture for the
    Registrants 3% Convertible Senior Debentures due 2024.4
.4(10)

Stockholder Protection Rights
    Agreement dated February 15, 2000.4
.5(11)

Amended and Restated Stockholder
    Protection Rights Agreement, dated as of November 1, 2001.10
.1(12)

Form of Indemnification Agreement
    entered into between the Registrant and each of the
    Registrants executive officers and directors.10
.2(13)

1998 Employee Stock Purchase Plan
    and related agreements.10
.3(14)

1997 Stock Plan and related option
    agreement, as currently in effect.10
.22(15)

Stock Purchase Agreement between
    SBC Communications Inc. and Covad Communications
    Group, Inc., dated September 10, 2000.10
.23(16)

Resale and Marketing Agreement
    between SBC Communications Inc. and Covad Communications Group,
    Inc., dated September 10, 2000.10
.24(17)

Credit Agreement dated as of
    November 12, 2001 by and between Covad Communications
    Group, Inc. and SBC Communications Inc.10
.25(18)

Resale Agreement dated as of
    November 12, 2001 by and among SBC Communications Inc.,
    Covad Communications Group, Inc., Covad Communications Company,
    DIECA Communications Company and Laser Link.net, Inc.10
.26(19)

Term Loan Note dated
    December 20, 2001 made by Covad Communications Group, Inc.
    in favor of SBC Communications Inc.10
.27(20)

Deed of Trust, Assignment of
    Leases and Rents, Security Agreement and Financing Statement
    dated effective as of December 20, 2001 made by DIECA
    Communications, Inc. in favor of Title Associates of
    Virginia, Inc., for the benefit of SBC Communications Inc.10
.28(21)

Pledge Agreement dated as of
    December 20, 2001 made by Covad Communications Group, Inc.
    to SBC Communications Inc.10
.30(22)

Security Agreement dated as of
    December 20, 2001 made by Covad Communications Company in
    favor of SBC Communications Inc.10
.31(23)

Intellectual Property Security
    Agreement dated as of December 20, 2001 made by Covad
    Communications Company in favor of SBC Communications Inc. 98




---



##### Table of Contents



ExhibitNumber

Description10
.32(24)

Subsidiary Guaranty dated as of
    December 20, 2001 made by Covad Communications Company in
    favor of and for the benefit of SBC Communications Inc.10
.33(25)

Capital Markets Debt Subordination
    Provisions.10
.34(26)

General Unsecured Debt
    Subordination Agreement.10
.35(27)

Form of Warrant to Purchase Common
    Stock Issued by the Registrant on September 3, 2002 to
    America Online, Inc.10
.36(28)

Form of Warrant to Purchase Common
    Stock Issued by the Registrant on January 1, 2003 to
    AT&T Corp.10
.37(29)

Covad Communications Group, Inc.,
    2003 Employee Stock Purchase Plan, as amended.10
.38(30)

Covad Communications Group, Inc.
    Executive Severance Plan and Summary Plan Description.10
.39(31)

General Release of All Claims
    executed by Anjali Joshi.10
.40(32)

Letter Agreement between Covad
    Communications and Charles Hoffman dated May 29, 2001.10
.41(33)

Lease Agreement for 110 Rio
    Robles, San Jose, California, between Covad Communications
    and CarrAmerica Realty Corporation dated August 6, 2003.10
.43(34)

Change in Control Agreement
    between Covad Communications Group, Inc. and Charles E. Hoffman.10
.46(35)

Change in Control Agreement
    between Covad Communications Group, Inc. and James A. Kirkland.10
.48(36)

Change in Control Agreement
    between Covad Communications Group, Inc. and David McMorrow.10
.50(37)

Change in Control Agreement
    between Covad Communications Group, Inc. and Chris Dunn.10
.51(38)

Indemnification Agreement between
    Covad Communications Group, Inc. and Chris Dunn.10
.52(39)

General Release of All Claims by
    and between Covad Communications Group, Inc. and
    Mark Richman.10
.53(40)

First Amendment to Lease by and
    between Covad Communications Company and CarrAmerica Realty
    Operating Partnership, L.P. dated July 27, 2005.10
.54(41)

Indemnification Agreement between
    Covad Communications Group, Inc. and Lisa Hook.10
.55(42)

Transition Agreement between Covad
    Communications Group, Inc. and Patrick Bennett.10
.56(43)

Transition Agreement between Covad
    Communications Group, Inc. and Andrew Lockwood.10
.57(44)

Transition Agreement between Covad
    Communications Group, Inc. and P. Michael Hanley.21
.1

Subsidiaries of the Registrant.23
.1

Consent of PricewaterhouseCoopers
    LLP, Independent Registered Public Accounting Firm.23
.2

Consent of Ernst & Young
    LLP, Independent Registered Public Accounting Firm.24
.1

Power of Attorney (incorporated in
    the signature page herein).31
.1

Certification Pursuant to
    Rule 13a-14(a).31
.2

Certification Pursuant to
    Rule 13a-14(a).32
.1*

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the
    Sarbanes-Oxley
    Act of 2002.32
.2*

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the
    Sarbanes-Oxley
    Act of 2002.     *
    
    These certifications accompany the Registrants Annual
    Report on Form
    10-K and are
    not deemed filed with the SEC.  (1)
    
    Incorporated by reference to the exhibit of corresponding number
    filed with our current report on
    Form 8-K
    as originally filed on December 28, 2001.(2)
    
    Incorporated by reference to Exhibit 99.12 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(3)
    
    Incorporated by reference to Exhibit 2.1 filed with our
    quarterly report on
    Form 10-Q
    as originally filed on May 17, 2004. 99




---



##### Table of Contents



(4)
    
    Incorporated by reference to Exhibit 2.1 filed with our
    current report on
    Form 8-K
    as originally filed on October 7, 2005.(5)
    
    Incorporated by reference to Exhibit 3.2 filed with our
    registration statement on
    Form S-1/A
    (No. 333-38688)
    as originally filed on July 17, 2000 and as subsequently
    amended.(6)
    
    Incorporated by reference to Exhibit 3.5 filed with our
    registration statement on
    Form S-1/A
    (No. 333-38688)
    as originally filed on July 17, 2000 and as subsequently
    amended.(7)
    
    Incorporated by reference to Exhibit 3.3 filed with our
    Annual Report on
    Form 10-K
    as filed on March 29, 2002.(8)
    
    Incorporated by reference to Exhibit 3.1 of our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(9)
    
    Incorporated by reference to the exhibit of corresponding number
    filed with our quarterly report on
    Form 10-Q
    as originally filed on May 17, 2004.(10)
    
    Incorporated by reference to Exhibit 4.1 filed with our
    current report on
    Form 8-A
    as originally filed on February 22, 2000 and as
    subsequently amended.(11)
    
    Incorporated by reference to Exhibit 4.1 filed with our
    current report on
    Form 8-K
    as originally filed on December 14, 2001.(12)
    
    Incorporated by reference to Exhibit 10.1 filed with our
    registration statement on
    Form S-1
    (No. 333-63899)
    as originally filed on September 21, 1998 and as
    subsequently amended.(13)
    
    Incorporated by reference to Exhibit 10.2 filed with our
    Annual Report on
    Form 10-K
    as filed on March 29, 2002.(14)
    
    Incorporated by reference to Exhibit 10.3 filed with our
    Annual Report on
    Form 10-K
    as filed on March 29, 2002.(15)
    
    Incorporated by reference to Exhibit 4.1 filed with our
    current report on
    Form 8-K
    as originally filed on September 12, 2000 and as
    subsequently amended.(16)
    
    Incorporated by reference to Exhibit 4.2 filed with our
    current report on
    Form 8-K
    as originally filed on September 12, 2000 and as
    subsequently amended.(17)
    
    Incorporated by reference to Exhibit 10.2 filed with our
    quarterly report on
    Form 10-Q
    as originally filed on November 14, 2001.(18)
    
    Incorporated by reference to Exhibit 10.1 filed with our
    quarterly report on
    Form 10-Q
    as originally filed on November 14, 2001.(19)
    
    Incorporated by reference to Exhibit 99.4 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(20)
    
    Incorporated by reference to Exhibit 99.5 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(21)
    
    Incorporated by reference to Exhibit 99.6 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(22)
    
    Incorporated by reference to Exhibit 99.7 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(23)
    
    Incorporated by reference to Exhibit 99.8 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(24)
    
    Incorporated by reference to Exhibit 99.9 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(25)
    
    Incorporated by reference to Exhibit 99.10 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(26)
    
    Incorporated by reference to Exhibit 99.11 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001. 100




---



##### Table of Contents



(27)
    
    Incorporated by reference to Exhibit 99.1 filed with our
    current report on
    Form 8-K
    as originally filed September 5, 2002.(28)
    
    Incorporated by reference to Exhibit 99.1 filed with our
    current report on
    Form 8-K
    as originally filed January 7, 2003.(29)
    
    Incorporated by reference to Exhibit 99.1 filed with our
    current report on
    Form 8-K
    as originally filed on December 8, 2005.(30)
    
    Incorporated by reference to Exhibit 10.1 filed with our
    current report on
    Form 8-K
    as originally filed October 6, 2004.(31)
    
    Incorporated by reference to Exhibit 10.40 filed with our
    quarterly report on
    Form 10-Q
    as filed on October 24, 2003.(32)
    
    Incorporated by reference to Exhibit 10.41 to our annual
    report on Form
    10-K as
    originally filed on February 27, 2004.(33)
    
    Incorporated by reference to Exhibit 10.42 to our annual
    report on Form
    10-K as
    originally filed on February 27, 2004.(34)
    
    Incorporated by reference to Exhibit 10.2 to our current
    report on Form
    8-K as
    originally filed on October 6, 2004.(35)
    
    Incorporated by reference to Exhibit 10.5 to our current
    report on Form
    8-K as
    originally filed on October 6, 2004.(36)
    
    Incorporated by reference to Exhibit 10.7 to our current
    report on Form
    8-K as
    originally filed on October 6, 2004.(37)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(38)
    
    Incorporated by reference to Exhibit 10.2 to our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(39)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on November 24, 2004.(40)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on August 1, 2005.(41)
    
    Incorporated by reference to Exhibit 10.3 to our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(42)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on December 15, 2005.(43)
    
    Incorporated by reference to Exhibit 10.2 to our current
    report on Form
    8-K as
    originally filed on December 15, 2005.(44)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on
    Form 8-K
    as originally filed on January 23, 2006. 101




---



##### Table of Contents



SIGNATURES      By:
    /s/  Christopher Dunn  Christopher Dunn
  Senior Vice President and
  Chief Financial Officer
    Signature

Title/s/  Charles E.
    Hoffman(Charles
    E. Hoffman)

Chief Executive Officer and
    Director
    (Principal Executive Officer)/s/  Christopher Dunn(Christopher
    Dunn)

Senior Vice President and Chief
    Financial Officer
    (Principal Financial and Accounting Officer)/s/  Charles McMinn(Charles
    McMinn)

Chairman of the Board of Directors/s/  L. Dale Crandall(L.
    Dale Crandall)

Director/s/  Lisa Hook(Lisa
    Hook)

Director/s/  Hellene Runtagh(Hellene
    Runtagh)

Director/s/  Larry Irving(Larry
    Irving)

Director/s/  Daniel Lynch(Daniel
    Lynch)

Director/s/  Richard A.
    Jalkut(Richard
    Jalkut)

Director  102




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description2
.1(1)

Plan: First Amended Plan of
    Reorganization, as Modified, of Covad Communications Group, Inc.
    dated November 26, 2001.2
.2(2)

Order Pursuant to
    Section 1129 of the Bankruptcy Code Confirming the
    Debtors First Amended Chapter 11 Plan of
    Reorganization, as Modified (Docket No. 214).2
.3(3)

Agreement and Plan of Merger,
    dated as of March 2, 2004, among Covad Communications
    Group, Inc., Covad Communications Investment Corp., GoBeam,
    Inc. and Eduardo Briceno, as Representative.2
.4(4)

Agreement and Plan of Merger,
    dated as of October 4, 2005, among Covad Communications
    Group, Inc., Windtalker Acquisition Corp., NextWeb, Inc. and
    Ghia Griarte as Representative.3
.1(5)

Amended and Restated Certificate
    of Incorporation.3
.2(6)

Certificate of Amendment of
    Certificate of Incorporation of the Registrant filed on
    July 14, 2000.3
.3(7)

Certificate of Amendment of
    Certificate of Incorporation of the Registrant filed on
    December 20, 2001.3
.4(8)

Amended and Restated Bylaws, as
    currently in effect.4
.1(9)

Indenture, dated as of
    March 10, 2004 between the Registrant and The Bank of New
    York, as Trustee.4
.2(9)

Resale Registration Rights
    Agreement, dated as of March 10, 2004 among the Registrant
    and Banc of America Securities LLC.4
.3(9)

Form of Debenture for the
    Registrants 3% Convertible Senior Debentures due 2024.4
.4(10)

Stockholder Protection Rights
    Agreement dated February 15, 2000.4
.5(11)

Amended and Restated Stockholder
    Protection Rights Agreement, dated as of November 1, 2001.10
.1(12)

Form of Indemnification Agreement
    entered into between the Registrant and each of the
    Registrants executive officers and directors.10
.2(13)

1998 Employee Stock Purchase Plan
    and related agreements.10
.3(14)

1997 Stock Plan and related option
    agreement, as currently in effect.10
.22(15)

Stock Purchase Agreement between
    SBC Communications Inc. and Covad Communications
    Group, Inc., dated September 10, 2000.10
.23(16)

Resale and Marketing Agreement
    between SBC Communications Inc. and Covad Communications Group,
    Inc., dated September 10, 2000.10
.24(17)

Credit Agreement dated as of
    November 12, 2001 by and between Covad Communications
    Group, Inc. and SBC Communications Inc.10
.25(18)

Resale Agreement dated as of
    November 12, 2001 by and among SBC Communications Inc.,
    Covad Communications Group, Inc., Covad Communications Company,
    DIECA Communications Company and Laser Link.net, Inc.10
.26(19)

Term Loan Note dated
    December 20, 2001 made by Covad Communications Group, Inc.
    in favor of SBC Communications Inc.10
.27(20)

Deed of Trust, Assignment of
    Leases and Rents, Security Agreement and Financing Statement
    dated effective as of December 20, 2001 made by DIECA
    Communications, Inc. in favor of Title Associates of
    Virginia, Inc., for the benefit of SBC Communications Inc.10
.28(21)

Pledge Agreement dated as of
    December 20, 2001 made by Covad Communications Group, Inc.
    to SBC Communications Inc.10
.30(22)

Security Agreement dated as of
    December 20, 2001 made by Covad Communications Company in
    favor of SBC Communications Inc.10
.31(23)

Intellectual Property Security
    Agreement dated as of December 20, 2001 made by Covad
    Communications Company in favor of SBC Communications Inc.10
.32(24)

Subsidiary Guaranty dated as of
    December 20, 2001 made by Covad Communications Company in
    favor of and for the benefit of SBC Communications Inc.10
.33(25)

Capital Markets Debt Subordination
    Provisions.10
.34(26)

General Unsecured Debt
    Subordination Agreement.10
.35(27)

Form of Warrant to Purchase Common
    Stock Issued by the Registrant on September 3, 2002 to
    America Online, Inc.




---



##### Table of Contents



ExhibitNumber

Description10
.36(28)

Form of Warrant to Purchase Common
    Stock Issued by the Registrant on January 1, 2003 to
    AT&T Corp.10
.37(29)

Covad Communications Group, Inc.,
    2003 Employee Stock Purchase Plan, as amended.10
.38(30)

Covad Communications Group, Inc.
    Executive Severance Plan and Summary Plan Description.10
.39(31)

General Release of All Claims
    executed by Anjali Joshi.10
.40(32)

Letter Agreement between Covad
    Communications and Charles Hoffman dated May 29, 2001.10
.41(33)

Lease Agreement for 110 Rio
    Robles, San Jose, California, between Covad Communications
    and CarrAmerica Realty Corporation dated August 6, 2003.10
.43(34)

Change in Control Agreement
    between Covad Communications Group, Inc. and Charles E. Hoffman.10
.46(35)

Change in Control Agreement
    between Covad Communications Group, Inc. and James A. Kirkland.10
.48(36)

Change in Control Agreement
    between Covad Communications Group, Inc. and David McMorrow.10
.50(37)

Change in Control Agreement
    between Covad Communications Group, Inc. and Chris Dunn.10
.51(38)

Indemnification Agreement between
    Covad Communications Group, Inc. and Chris Dunn.10
.52(39)

General Release of All Claims by
    and between Covad Communications Group, Inc. and
    Mark Richman.10
.53(40)

First Amendment to Lease by and
    between Covad Communications Company and CarrAmerica Realty
    Operating Partnership, L.P. dated July 27, 2005.10
.54(41)

Indemnification Agreement between
    Covad Communications Group, Inc. and Lisa Hook.10
.55(42)

Transition Agreement between Covad
    Communications Group, Inc. and Patrick Bennett.10
.56(43)

Transition Agreement between Covad
    Communications Group, Inc. and Andrew Lockwood.10
.57(44)

Transition Agreement between Covad
    Communications Group, Inc. and P. Michael Hanley.21
.1

Subsidiaries of the Registrant.23
.1

Consent of PricewaterhouseCoopers
    LLP, Independent Registered Public Accounting Firm.23
.2

Consent of Ernst & Young
    LLP, Independent Registered Public Accounting Firm.24
.1

Power of Attorney (incorporated in
    the signature page herein).31
.1

Certification Pursuant to
    Rule 13a-14(a).31
.2

Certification Pursuant to
    Rule 13a-14(a).32
.1*

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the
    Sarbanes-Oxley
    Act of 2002.32
.2*

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the
    Sarbanes-Oxley
    Act of 2002.     *
    
    These certifications accompany the Registrants Annual
    Report on Form
    10-K and are
    not deemed filed with the SEC.  (1)
    
    Incorporated by reference to the exhibit of corresponding number
    filed with our current report on
    Form 8-K
    as originally filed on December 28, 2001.(2)
    
    Incorporated by reference to Exhibit 99.12 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(3)
    
    Incorporated by reference to Exhibit 2.1 filed with our
    quarterly report on
    Form 10-Q
    as originally filed on May 17, 2004.(4)
    
    Incorporated by reference to Exhibit 2.1 filed with our
    current report on
    Form 8-K
    as originally filed on October 7, 2005.(5)
    
    Incorporated by reference to Exhibit 3.2 filed with our
    registration statement on
    Form S-1/A
    (No. 333-38688)
    as originally filed on July 17, 2000 and as subsequently
    amended.(6)
    
    Incorporated by reference to Exhibit 3.5 filed with our
    registration statement on
    Form S-1/A
    (No. 333-38688)
    as originally filed on July 17, 2000 and as subsequently
    amended.(7)
    
    Incorporated by reference to Exhibit 3.3 filed with our
    Annual Report on
    Form 10-K
    as filed on March 29, 2002.




---



##### Table of Contents



(8)
    
    Incorporated by reference to Exhibit 3.1 of our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(9)
    
    Incorporated by reference to the exhibit of corresponding number
    filed with our quarterly report on
    Form 10-Q
    as originally filed on May 17, 2004.(10)
    
    Incorporated by reference to Exhibit 4.1 filed with our
    current report on
    Form 8-A
    as originally filed on February 22, 2000 and as
    subsequently amended.(11)
    
    Incorporated by reference to Exhibit 4.1 filed with our
    current report on
    Form 8-K
    as originally filed on December 14, 2001.(12)
    
    Incorporated by reference to Exhibit 10.1 filed with our
    registration statement on
    Form S-1
    (No. 333-63899)
    as originally filed on September 21, 1998 and as
    subsequently amended.(13)
    
    Incorporated by reference to Exhibit 10.2 filed with our
    Annual Report on
    Form 10-K
    as filed on March 29, 2002.(14)
    
    Incorporated by reference to Exhibit 10.3 filed with our
    Annual Report on
    Form 10-K
    as filed on March 29, 2002.(15)
    
    Incorporated by reference to Exhibit 4.1 filed with our
    current report on
    Form 8-K
    as originally filed on September 12, 2000 and as
    subsequently amended.(16)
    
    Incorporated by reference to Exhibit 4.2 filed with our
    current report on
    Form 8-K
    as originally filed on September 12, 2000 and as
    subsequently amended.(17)
    
    Incorporated by reference to Exhibit 10.2 filed with our
    quarterly report on
    Form 10-Q
    as originally filed on November 14, 2001.(18)
    
    Incorporated by reference to Exhibit 10.1 filed with our
    quarterly report on
    Form 10-Q
    as originally filed on November 14, 2001.(19)
    
    Incorporated by reference to Exhibit 99.4 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(20)
    
    Incorporated by reference to Exhibit 99.5 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(21)
    
    Incorporated by reference to Exhibit 99.6 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(22)
    
    Incorporated by reference to Exhibit 99.7 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(23)
    
    Incorporated by reference to Exhibit 99.8 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(24)
    
    Incorporated by reference to Exhibit 99.9 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(25)
    
    Incorporated by reference to Exhibit 99.10 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(26)
    
    Incorporated by reference to Exhibit 99.11 filed with our
    current report on
    Form 8-K
    as originally filed on December 28, 2001.(27)
    
    Incorporated by reference to Exhibit 99.1 filed with our
    current report on
    Form 8-K
    as originally filed September 5, 2002.(28)
    
    Incorporated by reference to Exhibit 99.1 filed with our
    current report on
    Form 8-K
    as originally filed January 7, 2003.(29)
    
    Incorporated by reference to Exhibit 99.1 filed with our
    current report on
    Form 8-K
    as originally filed on December 8, 2005.(30)
    
    Incorporated by reference to Exhibit 10.1 filed with our
    current report on
    Form 8-K
    as originally filed October 6, 2004.(31)
    
    Incorporated by reference to Exhibit 10.40 filed with our
    quarterly report on
    Form 10-Q
    as filed on October 24, 2003.




---



##### Table of Contents



(32)
    
    Incorporated by reference to Exhibit 10.41 to our annual
    report on Form
    10-K as
    originally filed on February 27, 2004.(33)
    
    Incorporated by reference to Exhibit 10.42 to our annual
    report on Form
    10-K as
    originally filed on February 27, 2004.(34)
    
    Incorporated by reference to Exhibit 10.2 to our current
    report on Form
    8-K as
    originally filed on October 6, 2004.(35)
    
    Incorporated by reference to Exhibit 10.5 to our current
    report on Form
    8-K as
    originally filed on October 6, 2004.(36)
    
    Incorporated by reference to Exhibit 10.7 to our current
    report on Form
    8-K as
    originally filed on October 6, 2004.(37)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(38)
    
    Incorporated by reference to Exhibit 10.2 to our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(39)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on November 24, 2004.(40)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on August 1, 2005.(41)
    
    Incorporated by reference to Exhibit 10.3 to our current
    report on Form
    8-K as
    originally filed on November 2, 2005.(42)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on Form
    8-K as
    originally filed on December 15, 2005.(43)
    
    Incorporated by reference to Exhibit 10.2 to our current
    report on Form
    8-K as
    originally filed on December 15, 2005.(44)
    
    Incorporated by reference to Exhibit 10.1 to our current
    report on
    Form 8-K
    as originally filed on January 23, 2006.