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To: Oeconomicus who wrote (10967)	6/27/2002 3:51:24 PM
From: BWAC	Read Replies (2) \| Respond to of 11568

<The ones at issue were payments for leased access to other telcos' lines. He apparently felt that, since they were making these payments in advance of actually using the lines to generate revenue, that the costs should be deferred and taken later against the associated revenue. > Where did you hear that from. Not that it isn't what happenned , just that I haven't be able to find it yet?

To: Oeconomicus who wrote (10967)	6/27/2002 4:53:11 PM
From: Charles Tutt	Respond to of 11568

That seems to be an awful lot of money to be paying for capacity that hasn't yet been put into service. JMHO, of course. Charles Tutt (SM)

To: Oeconomicus who wrote (10967)	6/27/2002 7:13:35 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 11568

He apparently felt that, since they were making these payments in advance of actually using the lines to generate revenue, that the costs should be deferred and taken later against the associated revenue. The board, after conferring with KPMG said "No! You can't do that. These are operating lease payments and you can't defer the expense. And since you've possibly cost us the whole company, you're toast. Goodbye." Thanks for this detail. This is the first I've seen, do you have a source for this? Bonehead question for the telco people here - why make operating lease payments in advance of using the lines? Thats kindof contradictory to the terms of an operating lease is it not? Now if this was a finance lease,different story (of course no such thing as a finance lease on phone lines I know) but normally you pay as you go with operating leases. I have to say just from a layman's perspective it is kindof a stretch to capitalize any kind of lease. I was thinking we were talking about software upgrades or comm equipment or some other capital expenditure where the lines between "maintenance" and "upgrade" are blurred. L edit - I just read the prior posts citing the NYT article. Still seems curious about lease payments for not yet revenue generating lines, though.