16. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Text Block]

16. COMMITMENTS AND CONTINGENCIES

Operating Lease Commitments

We lease office space, computer and other equipment and automobiles under noncancelable lease agreements. The leases generally provide that we pay the taxes, insurance and maintenance expenses related to the leased assets. Future minimum lease payments for noncancelable operating leases as of December 31, 2011 are as follows (in thousands):

2012	$	17,965
2013		14,500
2014		12,290
2015		10,036
2016		9,261
Thereafter		25,872
Net minimum lease payments	$	89,924

Included in our future minimum lease payments is an aggregate of $6.0 million for leases included in our restructuring efforts. Rent expense under operating leases was $11.4 million, $12.3 million and $13.1 million for the years ended December 31, 2011, 2010 and 2009, respectively. In 2011, 2010 and 2009 facilities rent was reduced by approximately $1.6 million,$1.7 million and $0.7 million, respectively, associated with contractual obligations provided for in the restructuring charge.

Asset Retirement Obligation

Our recorded asset retirement obligation liability represents the estimated costs to bring certain office buildings that we lease back to their original condition after the termination of the lease. In instances where our lease agreements either contain make-whole provision clauses or subject us to remediation costs, we establish an asset retirement obligation liability with a corresponding increase to leasehold improvements. These amounts are included in “Accrued expenses” under “Long-Term Liabilities” in our consolidated balance sheets. For the year ended December 31, 2011, asset retirement obligation liabilities increased by approximately $0.4 million primarily as a result of increased remediation costs. Our asset retirement obligation liability balance was $1.0 million and $0.6 million at December 31, 2011 and 2010, respectively.

Supply Agreements

We purchase voice and data services pursuant to supply agreements with telecommunications service providers. Agreements with some of our telecommunications service providers contain minimum purchase requirements totaling approximately $28.5 million for 2012. Our total minimum purchase requirements were approximately $51.0 million, $32.9 million and $37.8 million in 2011, 2010 and 2009, respectively, of which we incurred costs in excess of these minimums.

Litigation Matters

State Corporate Tax Matter

On August 6, 2010, one of our former subsidiaries, Xpedite, which was included in the sale of our PGiSend messaging business to EasyLink completed on October 21, 2010, received a final determination from the New Jersey Division of Taxation upholding a corporate business tax audit assessment for the tax years ended December 31, 1998 through December 31, 2000 and December 31, 2002. The assessment totaled approximately $6.2 million as of August 15, 2010, including approximately $2.4 million in taxes and $3.8 million in accrued interest and penalties. The assessment relates to the sourcing of Xpedite’s receipts for purposes of determining the amount of its income that is properly attributable to, and therefore taxable by, New Jersey. We are vigorously contesting the determination and filed a timely appeal with the Tax Court of New Jersey on November 2, 2010. We believe we are adequately reserved for this matter. However, if the New Jersey Division of Taxation’s final determination is sustained, the amount assessed could result in a material adjustment to our consolidated financial statements which

would impact our financial condition and results of operations. We agreed to indemnify EasyLink for this matter in connection with our PGiSend sale.

Other Litigation and Claims

We are involved in other litigation matters and are subject to claims that we do not believe will have a material adverse effect upon our business, financial condition or results of operations, although we can offer no assurance as to the ultimate outcome of any such matters.