FairPoint Communications 2006 Annual Report Download - page 97
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and by access charges in the interstate market. Revenues earned through the various sharing arrangements are initially recorded based on the Company’s
estimates. The Company recognized $0.8 million, $3.3 million, and $3.1 million of revenue for settlements and adjustments related to prior years during
2006, 2005, and 2004, respectively.
(a) Operating Leases
Future minimum lease payments under noncancelable operating leases as of December 31, 2006 are as follows (in thousands):
Year ending December 31:
2007 $1,112
2008 1,077
2009 940
2010 528
2011 580
Thereafter 3,614
Total minimum lease payments $7,851
In January 2006, the Company reached an agreement to amend the remaining lease related to its discontinued operations; therefore, as of January 2006,
there are no longer any sublease arrangements in place. Total rent expense from continuing operations was $3.8 million, $3.5 million, and $3.2 million in
2006, 2005, and 2004, respectively. All leases associated with discontinued operations have been settled as of December 31, 2006.
The Company does not have any leases with contingent rental payments or any leases with contingency renewal, purchase options, or escalation clauses.
(b) Legal Proceedings
On June 6, 2005, a purported class action complaint was filed in the General Court of Justice, Superior Court Division, of the State of North Carolina
by Robert Lowinger on behalf of himself and all other similarly situated persons against the Company, the Company’s Chairman and Chief Executive
Officer, certain of the Company’s current and former directors and certain of the Company’s stockholders. The complaint alleges violations of Sections 11
and 12(a)(2) and liability under Section 15 of the Securities Act, and alleges that the Company’s registration statement on Form S-1 (which was declared
effective by the SEC on February 3, 2005) and the related prospectus dated February 3, 2005, each relating to the Company’s initial public offering of
common stock, contained certain material misstatements and omitted certain material information necessary to be included relating to the Company’s
broadband products and access line trends. The plaintiff, who has been a plaintiff in several prior securities cases, seeks rescission rights and unspecified
damages on behalf of a purported class of purchasers of the common stock “issued pursuant and/or traceable to the Company’s IPO during the period from
February 3, 2005 through March 21, 2005”. The Company removed the action to Federal Court. The plaintiff filed a motion to
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