Callaway 2007 Annual Report Download - page 102

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time the terminated Enron Contract ceased to represent a derivative instrument in accordance with SFAS
No. 133. Because the Enron Contract is terminated and neither party to the contract is performing pursuant to the
terms of the contract, the Company no longer records valuation adjustments for changes in electricity rates.
The Company continues to reflect on its balance sheet the derivative valuation account of $19,922,000,
subject to quarterly review in accordance with applicable law and accounting regulations, including SFAS
No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” The
Company believes the Enron Contract has been terminated, and as of December 31, 2007, EESI has not asserted
any claim against the Company. There can be no assurance, however, that EESI or another party will not assert a
future claim against the Company or that a court or arbitrator will not ultimately nullify the Company’s
termination of the Enron Contract. No provision has been made for contingencies or obligations, if any, under the
Enron Contract beyond November 30, 2001.
Lease Commitments
The Company leases certain warehouse, distribution and office facilities, vehicles as well as office
equipment under operating leases and certain computer and telecommunication equipment under capital leases.
Lease terms range from 1 to 10 years expiring at various dates through November 2017, with options to renew at
varying terms. Commitments for minimum lease payments under non-cancelable operating leases as of
December 31, 2007 are as follows (in thousands):
2008 .............................................................................. $ 7,721
2009 .............................................................................. 4,783
2010 .............................................................................. 3,295
2011 .............................................................................. 2,637
2012 .............................................................................. 1,895
Thereafter .......................................................................... 6,925
$27,256
Rent expense for the years ended December 31, 2007, 2006 and 2005 was $9,818,000, $7,807,000 and
$7,737,000, respectively.
F-32