Windstream 2011 Annual Report Download - page 179

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-71
Litigation
On June 22, 2009, a putative class action lawsuit was filed in Kentucky federal district court against certain of our subsidiaries
on behalf of current and former customers in Kentucky. The complaint alleged that we overcharged customers because we
collected a gross receipts surcharge ("GRS") in violation of state and federal statutes and tariffs and common law. The federal
court referred the state tariff issues to the Kentucky Public Service Commission. The federal court recently ruled that the GRS
was a rate that should have been in our federal tariffs prior to its collection from customers and issued an order regarding class
certification that, according to the court, was not final. We plan to continue to vigorously defend the court and administrative
proceedings. Based on a comprehensive analysis of the activity occurring during the third quarter of 2011, we accrued an
amount that is not material representing the amount of loss that is currently estimable and probable related to this matter.
Ultimate resolution, the timing of which is currently unknown, could result in a loss in a range of $0 to $8.0 million in excess
of the amount accrued.
We are party to various legal proceedings. Although the ultimate resolution of these various proceedings cannot be determined
at this time, our management does not believe that such proceedings, individually or in the aggregate, will have a material
adverse effect on the future consolidated results of income, cash flows or our financial condition.
In addition, our management is currently not aware of any environmental matters that, individually or in the aggregate, would
have a material adverse effect on the consolidated financial condition or our results of operations.
14. Business Segments:
We are organized based on the services and products that we offer. Our chief operating decision maker assesses performance
and allocates resources based on our consolidated results of operations. Under this organizational and reporting structure, our
operations consists of one reportable segment.
15. Supplemental Guarantor Information:
Debentures and notes, without collateral, issued by Windstream Corporation
In connection with the issuance of the 2013 Notes, the 2016 Notes, the 2017 Notes, the 2018 Notes, the 2019 Notes, the 2020
Notes, the 2021 Notes and the 2023 Notes (“the guaranteed notes”), certain of our wholly-owned subsidiaries (the
“Guarantors”), including all former subsidiaries of Valor, provide guarantees of those debentures. These guarantees are full and
unconditional, subject to certain customary release provisions, as well as joint and several. Certain Guarantors may be subject
to restrictions on their ability to distribute earnings to us. The remaining subsidiaries (the “Non-Guarantors”) of Windstream are
not guarantors of the guaranteed notes. Following the acquisitions of acquired businesses, the guaranteed notes were amended
to include certain subsidiaries of the acquired businesses as guarantors. The parent company is Windstream Corporation who is
also the issuer of the notes.
The following information presents condensed consolidated and combined statements of income for the years ended
December 31, 2011, 2010 and 2009, condensed consolidated balance sheets as of December 31, 2011 and 2010, and condensed
consolidated and combined statements of cash flows for the years ended December 31, 2011, 2010 and 2009 of the parent
company, the Guarantors and the Non-Guarantors. Investments consist of investments in net assets of subsidiaries held by the
parent company and other subsidiaries, and have been presented using the equity method of accounting.