FairPoint Communications 2010 Annual Report Download - page 128
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Table of Contents
As of December 31, 2010, approximately 85% of the Company’s access line equivalents were located in Maine, New Hampshire and Vermont. As a result
of this geographic concentration, the Company’s financial results will depend significantly upon economic conditions in these markets. A deterioration or
recession in any of these markets could result in a decrease in demand for the Company’s services and resulting loss of access line equivalents which could
have a material adverse effect on the Company’s business, financial condition, results of operations, liquidity and the market price of the Company’s
Common Stock.
In addition, if state regulators in Maine, New Hampshire or Vermont were to take an action that is adverse to the Company’s operations in those states, the
Company could suffer greater harm from that action by state regulators than it would from action in other states because of the concentration of operations in
those states.
Future minimum lease payments under capital leases and non-cancelable operating leases as of December 31, 2010 are as follows (in thousands):
Year ending December 31:
2011 $ 1,893 $ 10,442
2012 1,679 8,889
2013 1,499 7,403
2014 1,493 5,100
2015 105 2,572
Thereafter — 3,823
Total minimum lease payments $ 6,669 $ 38,229
Less interest and executory cost (1,405)
Present value of minimum lease payments 5,264
Less current installments (1,321)
Long-term obligations at December 31, 2010 $ 3,943
Total rent expense was $15.6 million, $16.7 million and $30.1 million in 2010, 2009 and 2008, respectively.
The Company does not have any leases with contingent rental payments or any leases with contingency renewal, purchase options, or escalation clauses.
From time to time, the Company is involved in litigation and regulatory proceedings arising out of its operations. With the exception of the Chapter 11
Cases, the Company’s management believes that it is not currently a party to any legal or regulatory proceedings, the adverse outcome of which, individually
or in the aggregate, would have a material adverse effect on the Company’s financial position or results of operations. To the extent the Company is currently
involved in any litigation and/or regulatory proceedings, such proceedings have been stayed as a result of the filing of the Chapter 11 Cases.
On the Petition Date FairPoint Communications and substantially all of its direct and indirect subsidiaries filed voluntary petitions for relief under the
Chapter 11 Cases.
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