FairPoint Communications 2004 Annual Report Download - page 522

5. COMMITMENTS
The General Partner, on behalf of the Partnership, and the Partnership itself have entered into operating leases for facilities and equipment used in its
operations. Lease contracts include renewal options that include rent expense adjustments based on the Consumer Price Index as well as annual and end-
of-lease term adjustments. Rent expense is recorded on a straight-line basis. The noncancellable lease term used to calculate the amount of the straight-
line rent expense is generally determined to be the initial lease term, including any optional renewal terms that are reasonably assured. Leasehold
improvements related to these operating leases are amortized over the shorter of their estimated useful lives or the noncancellable lease term. For the years
ended December 31, 2004, 2003 and 2002, the Partnership recognized a total of $1,446, $1,234 and $1,100, respectively, as rent expense related to
payments under these operating leases, which was included in cost of service and general and administrative expenses in the accompanying Statements
of Operations.
Aggregate future minimum rental commitmen ts under noncancelable operating leases, excluding renewal options that are not reasonably assured, for the
years shown are as follows:
Years Amount
2005 $ 1,450
2006 1,310
2007 1,144
2008 1,043
2009 536
2010 and thereafter 638
Total minimum payments $6,121
From time to time the General Partner enters into purchase commitments, primarily for network equipment, on behalf of the Partnership.
6. VALUATION AND QUALIFYING ACCOUNTS
Balance at
Beginning
of the Year
Additions
Charged to
Operations
Write-offs
Net of
Recoveries
Balance at
End
of the Year
Accounts Receivable Allowances:
2004 $20 $ — $ (20) $ —
2003 1 49 (30)20
2002 — 1 — 1
7. CONTINGENCIES
Cellco is subject to lawsuits and other claims including class actions, product liability, patent infringement, intellectual property, antitrust, partnership
disputes, and claims involving relations with resellers and agents. Cellco is also defending lawsuits against Cellco and other participants in the wireless
industry alleging various adverse effects as a result of wireless phone usage. Various consumer class action lawsuits allege that the Cellco breached
contracts with consumers, violated certain state consumer protection laws and other statutes and defrauded customers through concealed or misleading
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