Windstream 2015 Annual Report Download - page 217

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-87
13. Income Taxes, Continued:
We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. During
the years ended December 31, 2015, 2014 and 2013, we recognized approximately $0.1 million each year in interest and penalties.
Furthermore, we had approximately $0.1 million of interest and penalties accrued at each of December 31, 2015, 2014 and 2013.
14. 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, 2015:
Year (Millions)
2016 $ 113.4
2017 85.2
2018 73.3
2019 56.2
2020 38.3
Thereafter 130.7
Total $ 497.1
Rental expense totaled $128.0 million, $134.5 million and $120.2 million in 2015, 2014 and 2013, respectively.
Litigation
On February 9, 2015, a putative stockholder filed a Shareholder Class Action Complaint in the Delaware Court of Chancery,
captioned Doppelt v. Windstream Holdings, Inc., et al., C.A. No. 10629-VCN, against the Company and its Board of Directors.
This complaint was accompanied by a motion for a preliminary injunction seeking to enjoin the spin-off. The Court, ruling from
the bench on February 19, 2015 - the day before a special meeting of stockholders was scheduled to vote on a reverse stock split
and amended governing documents (the "Proposals") - denied plaintiff's motion for a preliminary injunction, reasoning that much
of the information sought by plaintiff had been disclosed in public filings available on the United States Securities and Exchange
Commission’s website, the Windstream Board was in no way conflicted, and while approval of the Proposals would facilitate the
spin-off, approval was not necessary to effect the spin-off. On March 16, 2015, plaintiff, joined by a second putative Windstream
stockholder, filed an Amended Shareholder Class Action Complaint alleging breaches of fiduciary duty by the Company and its
Board concerning Windstream's disclosures and seeking to rescind the spin-off and unspecified monetary damages. On February
5, 2016, the Court granted in part and denied in part defendants' motion to dismiss the amended complaint. The Court dismissed
Windstream, and plaintiffs' demand to rescind the spin-off, but otherwise denied the motion.
In addition, numerous copyright holders represented by RightsCorp have asserted that our customers have utilized our services
to allegedly illegally download and share alleged copyrighted material via peer-to-peer or “filesharing” programs. These holders
maintain that Windstream is responsible for alleged infringement because after notification, Windstream did not shut off service
to customers alleged to be repeat infringers, and, further, that Windstream may not claim safe harbor pursuant to the Digital
Millennium Copyright Act of 1998.
We believe that we have valid defenses to both the lawsuit and the alleged infringement claim, and we plan to vigorously defend
the pursuit of both matters. While the ultimate resolution of the matters is not currently predictable, if there are adverse rulings
against Windstream in either of these two matters, either ruling could constitute a material adverse outcome on the future
consolidated results of our income, cash flows, or financial condition.