Earthlink 2007 Annual Report Download - page 198
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HELIO, INC. and HELIO LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
14. Financial Instruments and Concentration of Risk
The carrying amounts of cash and cash equivalents, accounts receivable, subscriptions receivable, prepaid expenses, other current assets and
accounts payable are reasonable estimates of their fair value due to the short-term nature of these instruments.
The majority of the Company's wireless airtime services are leased from a third party wireless network provider. Any disruption of this
service would have an adverse impact on the Company's member experience and ongoing operating results.
15. Commitments and Contingencies
Leases
The Company leases certain of its facilities and equipment under non-cancelable operating leases expiring in various years through 2012.
The leases generally contain annual escalation provisions as well as renewal options. The total amount of rental payments, net of allowances and
incentives, is being charged to expense using the straight-line method over the terms of the leases. In addition to the rental payments, the
Company generally pays a monthly allocation of the buildings' operating expenses. Total rental expense in the periods ended December 31,
2005, 2006 and 2007 for all operating leases amounted to $0.9 million, $3.7 million and $7.5 million, respectively.
As of December 31, 2007, minimum lease commitments under non-cancelable leases, including office space, company-owned retail store
leases and equipment, are as follows (in thousands):
Litigation
From time-to-
time, the Company is involved in litigation relating to claims arising in the normal course of business. The Company does not
believe that any currently pending or threatened litigation will have a material adverse effect on the Company's results of operations or financial
condition.
16. 401K Plan
The Company has a defined contribution profit sharing plan covering all full-time employees. Employees may make pre-tax contributions
up to the maximum allowable by the Internal Revenue Code. Participants vest in their employee contributions at the rate of 25% per year
beginning at a participant's hire date (as defined). Employer contributions of approximately $0.1 million, $0.4 million
34
Operating
Leases
Year Ending December 31:
2008
7,900
2009
7,092
2010
5,150
2011
2,011
2012
1,954
Thereafter
6,088
Total minimum future lease payments
$
30,195