Windstream 2012 Annual Report Download - page 172

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-74
13. Commitments and Contingencies:
Lease Commitments
Minimum rental commitments for all non-cancellable operating leases, consisting principally of leases for network facilities,
real estate, office space and office equipment were as follows as of December 31, 2012:
Year (Millions)
2013 $ 249.5
2014 164.1
2015 160.7
2016 117.7
2017 60.6
Thereafter 174.6
Total $ 927.2
Rental expense totaled $210.1 million, $95.6 million and $61.4 million in 2012, 2011 and 2010, respectively.
Litigation
On June 22, 2009, a putative class action lawsuit was filed in Kentucky federal district court 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 court referred state tariff issues to the
Kentucky Public Service Commission ("Kentucky PSC"). In 2011, the federal court ruled that the GRS was a rate that should
have been listed in our federal tariffs prior to its collection and that class certification was proper. Based on that ruling, in third
quarter 2011, we accrued an amount that was not material and that represented the amount of loss estimable and probable at the
time. On May 4, 2012, the Kentucky PSC issued an order also finding the GRS was a rate that should have been in our local
retail tariff before being assessed on certain types of services. We appealed the order to state court in Franklin County,
Kentucky, primarily asserting that the Kentucky PSC erred in classifying the GRS as a rate. Additionally, on July 22, 2012, the
federal court formally certified a class of all retail and wholesale Windstream customers assessed the GRS on services subject
to our federal tariff. We filed an interlocutory appeal of the class certification with the Sixth Circuit. On November 1, 2012, the
Sixth Circuit denied the appeal, holding that the matter was not ripe for a decision.
Based on a comprehensive analysis of the recent activity regarding this case, we believe our current accrual remains adequate.
The ultimate resolution of the case, the timing of which is unknown, could result in a loss in a range of $0 to $8.0 million in
excess of the amount accrued. We plan to continue to vigorously defend the proceedings.
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 consist of one reportable segment. See consolidated statements of income for additional information regarding types
of revenue.