Frontier Communications 2005 Annual Report Download - page 90

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F-41
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
We conduct certain of our operations in leased premises and also lease certain equipment and other assets
pursuant to operating leases. The lease arrangements have terms ranging from 1 to 99 years and several contain rent
escalation clauses providing for increases in monthly rent at specific intervals. When rent escalation clauses exist,
we record total expected rent payments on a straight-line basis over the lease term. Certain leases also have renewal
options. Renewal options that are reasonably assured are included in determining the lease term. Future minimum
rental commitments for all long-term noncancelable operating leases and future minimum capital lease payments for
continuing operations as of December 31, 2005 are as follows:
($ in thousands)
ELI Capital
Leases
Operating
Leases
Year ending December 31:
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 179 $ 19,062
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 12,605
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555 11,840
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561 10,416
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 8,891
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,703 29,274
Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . 9,113 $ 92,088
Less amount representing interest (rates range from 9.75% to 10.65%) . . . (4,826)
Present value of net minimum capital lease payments . . . . . . . . 4,287
Less current installments of obligations under capital leases . . . . . . . . . . . (41)
Obligations under capital leases, excluding
current installments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,246
Total rental expense included in our results of operations for the years ended December 31, 2005, 2004 and
2003 was $24,146,000, $26,349,000 and $33,801,000, respectively. Until March 1, 2005, we sublet certain office
space in our corporate office to a charitable foundation formed by our former Chairman.
We are a party to contracts with several unrelated long distance carriers. The contracts provide fees based on
traffic they carry for us subject to minimum monthly fees.
At December 31, 2005, the estimated future payments for obligations under our noncancelable long distance
contracts and service agreements are as follows:
Year ILEC / ELI
($ in thousands)
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,619
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,337
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,017
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,244
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,052
thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,115
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,384
We sold all of our 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