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VONAGE HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
At December 31, 2009, future payments under capital leases and minimum payments under non-cancelable operating
leases are as follows over each of the next five years and thereafter:
December 31, 2009
Capital
Leases
Operating
Leases
2010 $ 4,038 $3,948
2011 4,118 499
2012 4,200 88
2013 4,284 –
2014 4,369 –
Thereafter 12,073 –
Total minimum payments required $ 33,082 $4,535
Less amounts representing interest (12,134)
Minimum future payments of principal 20,948
Current portion 1,500
Long-term portion $ 19,448
Rent expense was $5,449 for 2009, $7,507 for 2008
and $5,795 for 2007.
Stand-by Letters of Credit
We have stand-by letters of credit totaling $18,000
and $17,562, as of December 31, 2009 and 2008,
respectively.
End-User Commitments
We are obligated to provide telephone services to our
registered end-users. The costs related to the potential
utilization of minutes sold are expensed as incurred. Our
obligation to provide this service is dependent on the
proper functioning of systems controlled by third-party
service providers. We do not have a contractual service
relationship with some of these providers.
Vendor Commitments
We have engaged several vendors to assist with local
number portability, which allows customers to keep their
existing phone number when switching to our service. We
have committed to pay these vendors a minimum of
$3,480 in 2010 and $1,200 in 2011.
We have engaged a vendor to assist with inbound
sales inquiries. We have committed to pay this vendor
$8,500 in 2010.
We have committed to purchase communication
devices from several vendors. We have committed to pay
these vendors $5,134 in 2010. We have engaged a credit
card processor to process our billings. We have commit-
ted to pay this vendor a minimum of $3,700 each year
through 2012.
We have engaged a vendor to assist with the provi-
sion of E-911 services. We have committed to pay this
vendor approximately $3,300 in 2010.
We have engaged a vendor to provide analysis of
customer service calls. We have committed to pay this
vendor $570 in 2010 and $600 in 2011.
We have engaged a vendor who will (i) license to us
billing and ordering software, (ii) provide professional serv-
ices relating to the implementation, operation, support
and maintenance of the licensed system and (iii) transition
support services in connection with migration to the
licensed systems. We have committed to pay this vendor
$4,330 in 2010, $3,740 in 2011, $3,920 in 2012, $3,980 in
2013 and 2014 and $2,240 in 2015. We may terminate the
contract sooner subject to payment of early termination
fees.
Litigation
State Attorney General Proceedings. In 2008, we
learned that an initial group of 28 states’ attorneys general
had begun an investigation into certain of our business
practices. We received document requests from 22 of the
participating states. The requests sought information that
Vonage previously produced to the Wisconsin Attorney
General as part of an investigation commenced in
November 2007, which consisted of, among other things,
sales and retention marketing scripting, advertising dis-
closures, and information related to our money back
guarantee. The requests also sought, among other things,
information related to marketing and billing practices, as
well as early termination fees. On November 16, 2009, we
reached a definitive agreement to settle the investigation.
The settlement was filed for Court approval where such
approval was required. There was no finding of any viola-
tion or wrongdoing by us, and the 32 states participating
F-26 VONAGE ANNUAL REPORT 2009