XO Communications 2009 Annual Report Download - page 77

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19. COMMITMENTS AND CONTINGENCIES
Leases
The majority of the Company’s operating leases are for real property, which includes administrative and sales
offices, central switching offices, network nodes, data centers, collocation facilities and warehouse space.
These obligations expire at various dates through 2019. Most of these leases contain renewal options at
inception, some of which have been exercised. Most of the leases include rent escalation clauses, which are
recognized on a straight-line basis over the lease term. No leases contain purchase options or restrictions of
the Company’s activities concerning dividends, additional debt, or further leasing. Total gross rent expense for
2009, 2008 and 2007 was $66.0 million, $59.8 million and $61.0 million, respectively. The gross rent expense
does not include sublease income, which totaled $7.4 million, $5.7 million and $5.2 million for 2009, 2008
and 2007, respectively. Rent expense is classified as a component of Selling, general and administrative on the
Company’s Consolidated Statements of Operations.
Future minimum lease commitments under operating leases that had initial non-cancelable lease terms in
excess of one year as of December 31, 2009 are as follows (in thousands):
2010 . ........................................................... $ 64,011
2011 . ........................................................... 55,656
2012 . ........................................................... 50,730
2013 . ........................................................... 44,421
2014 . ........................................................... 34,379
Thereafter ........................................................ 48,357
Total minimum contractual payments .................................... $297,554
Total minimum sublease rental income to be received in the future under non-cancelable subleases as of
December 31, 2009 is $9.3 million. The total minimum lease payments disclosed in the table above have not
been reduced for these minimum sublease rentals.
Certain non-cancelable leases are classified as capital leases and the leased assets are included within the
telecommunications networks component of property and equipment. Details of the capitalized lease assets are
as follows as of December 31, (in thousands):
2009 2008
Network assets ................................................ $17,239 $16,552
Accumulated depreciation ........................................ (8,182) (6,580)
Net capitalized lease assets ....................................... $ 9,057 $ 9,972
At December 31, 2009, estimated future minimum lease payments under capital lease obligations are as
follows (in thousands):
2010 ............................................................. $ 5,783
2011 ............................................................. 3,102
2012 ............................................................. 1,571
2013 ............................................................. 1,571
2014 ............................................................. 1,439
Thereafter ......................................................... 8,955
Total minimum capital lease payments .................................... 22,421
Less: imputed interest................................................. (6,183)
Less: current portion of capital lease payments .............................. (4,650)
Long-term portion of capital lease payments ................................ $11,588
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