Windstream 2013 Annual Report Download - page 213

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-77
12. Income Taxes, Continued:
We do not expect or anticipate a significant increase or decrease over the next twelve months in the unrecognized tax benefits
reported above. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate are $3.4
million, $16.1 million and $16.5 million (net of indirect benefits) for the years ended December 31, 2013, 2012 and 2011,
respectively.
Included in the balance at December 31, 2013, 2012 and 2011, are $0.6 million, $0.8 million and $0.7 million, respectively, of
gross tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of
such deductibility. Because of the impact of the deferred tax accounting, other than interest and penalties, the disallowance of
the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the
taxing authority to an earlier period. These unrecognized tax benefits are included in other long-term liabilities in the
accompanying consolidated balance sheets for the years ended December 31, 2013 and 2012.
We file income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, we are no longer subject to
U.S. federal, state and local income tax examinations by tax authorities for years prior to 2010. However, due to acquired net
operating losses, tax authorities have the ability to adjust those net operating losses related to closed years. We have identified
Arkansas, California, Florida, Georgia, Illinois, Iowa, Kentucky, Nebraska, New York, North Carolina, Pennsylvania, Texas
and Virginia as “major” state taxing jurisdictions.
We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. During
the years ended December 31, 2013, 2012 and 2011, we recognized approximately $0.1 million, $0.6 million and $0.8 million
in interest and penalties, respectively. Furthermore, we had approximately $0.1 million, $3.1 million and $2.6 million of
interest and penalties accrued as of December 31, 2013, 2012 and 2011, respectively.
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, 2013:
Year (Millions)
2014 $ 101.0
2015 91.8
2016 81.1
2017 66.8
2018 56.3
Thereafter 232.5
Total $ 629.5
Rental expense totaled $120.2 million, $108.2 million and $38.9 million in 2013, 2012 and 2011, respectively.
Litigation
We are party to various legal proceedings, including certain lawsuits claiming infringement of patents relating to various
aspects of our business. In certain of the patent matters, other industry participants are also parties, and we may have claims of
indemnification against vendors/suppliers. The ultimate resolution of these legal proceedings cannot be determined at this
time. However, based on current circumstances, Management does not believe such proceedings, individually or in the
aggregate, will have a material adverse effect on the future consolidated results of our income, cash flows or financial
condition.
In addition, 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.