FairPoint Communications 2002 Annual Report Download - page 457

have entered into operating leases for facilities and equipment used in
its operations. Some lease contracts include renewal options that include
rent expense adjustments based on the Consumer Price Index. For the years
ended December 31, 2002 and 2001, the Partnership recognized a total of
$1,100 and $934, respectively, as rent expense related to payments under
these operating leases, which is included in cost of service and general
and administrative expenses in the accompanying Statements of Operations.
Future minimum rental commitments under noncancelable operating leases,
excluding renewal options which the Partnership intends to exercise, for
the years shown are as follows:
OPERATING
(DOLLARS IN THOUSANDS) LEASES
--------------------------------------------------------
YEARS
2003 $1,129
2004 1,036
2005 956
2006 886
2007 727
2008 and thereafter 1,434
------
Total minimum payments $6,168
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6. VALUATION AND QUALIFYING ACCOUNTS
BALANCE AT ADDITIONS WRITE-OFFS BALANCE AT
BEGINNING CHARGED TO NET OF END
(DOLLARS IN THOUSANDS) OF THE YEAR OPERATIONS RECOVERIES OF THE YEAR
--------------------------------------------------------------------------------------------
Accounts Receivable Allowances:
2001 $31 $-- $31 $--
2002 -- 1 -- 1
7. CONTINGENCIES
Cellco is subject to several lawsuits and other claims including class
actions, product liability, patent infringement, partnership disputes, and
claims involving relations with resellers and agents. Various consumer
class action lawsuits allege that the Cellco breached contracts with
consumers, violated certain state consumer protection laws and other
statutes and defrauded customers through concealed or misleading billing
practices. Certain of these lawsuits and other claims may impact the
Partnership. These litigation matters may involve indemnification
obligations by third parties and/or affiliated parties covering all or
part of any potential damage awards against Cellco and the Partnership
and/or insurance coverage. All of the above matters are subject to many
uncertainties, and outcomes are not predictable with assurance.
The Partnership may be allocated a portion of the damages that may result
upon adjudication of these matters if the claimants prevail in their
actions. Consequently, the ultimate liability with respect to these
matters at December 31, 2002 cannot be ascertained. The potential effect,
if any, on
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the financial condition and results of operations of the Partnership, in
the period in which these matters are resolved, may be material.