Frontier Communications 2004 Annual Report Download - page 88

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
F-44
We conduct certain of our operations in leased premises and also lease certain equipment and other assets pursuant to
operating leases. Future minimum rental commitments for all long-term noncancelable operating leases and future
minimum capital lease payments for continuing operations as of December 31, 2004 are as follows:
($ in thousands) Capital Operating
Leases Leases
Year ending December 31:
2005 $ 539 $ 21,198
2006 544 14,228
2007 549 12,537
2008 555 11,517
2009 561 10,018
Thereafter 7,269 35,494
Total minimum lease payments 10,017 $104,992
Less amount representing interest (rates range from 9.25% to 10.65%) (5,596)
Present value of net minimum capital lease payments 4,421
Less current installments of obligations under capital leases (81)
Obligations under capital leases, excluding
current installments $ 4,340
Total rental expense included in our results of operations for the years ended December 31, 2004, 2003 and 2002 was
$26,349,000, $33,801,000 and $37,480,000, respectively. Until March 1, 2005, we sublet certain office space in our
corporate office to a charitable foundation formed by our ex-Chairman.
We are a party to contracts with several unrelated long distance carriers. The contracts provide fees based on traffic
they carry for us subject to minimum monthly fees.
At December 31, 2004, the estimated future payments for obligations under our long distance contracts and service
agreements are as follows:
The Company sold all of its utility businesses as of April 1, 2004. However, we have retained a potential payment
obligation associated with our previous electric utility activities in the state of Vermont. The Vermont Joint Owners
(VJO), a consortium of 14 Vermont utilities, including us, entered into a purchase power agreement with Hydro-Quebec
in 1987. The agreement contains “step-up” provisions that state that if any VJO member defaults on its purchase
obligation under the contract to purchase power from Hydro-Quebec the other VJO participants will assume
responsibility for the defaulting party’s share on a pro-rata basis. Our pro-rata share of the purchase power obligation is
10%. If any member of the VJO defaults on its obligations under the Hydro-Quebec agreement, then the remaining
members of the VJO, including us, may be required to pay for a substantially larger share of the VJO’s total power
purchase obligation for the remainder of the agreement (which runs through 2015). Paragraph 13 of FIN 45 requires
($ in thousands) Year ILEC / ELI
2005 35,831$
2006 26,363
2007 6,796
2008 735
2009 165
thereafter 990
Total 70,880$