Telus 2010 Annual Report Download - page 165

TELUS 2010 annual report . 161
FINANCIAL STATEMENTS & NOTES: 20
(a) Leases
The Company occupies leased premises in various centres and has land, buildings and equipment under operating leases. At December 31, 2010,
the future minimum lease payments under capital leases and operating leases are as follows:
Operating lease payments
Operating
Land and buildings Vehicles lease receipts
Capital lease Occupancy and other from sub-let land
Years ending December 31 (millions) payments Rent costs Gross equipment To t a l and buildings
2 011 $ß8 $ß169 $ß96 $ß265 $ß20 $ß285 $ß 7
2012 – 153 88 241 12 253 12
2013 – 142 87 229 6 235 12
2014 – 129 83 212 2 214 12
2015 – 118 81 199 1 200 12
Total future minimum lease payments 8
Less imputed interest 1
Capital lease liability $ß7
20 COMMITMENTS AND CONTINGENT LIABILITIES
Summary review of contingent liabilities, lease obligations, guarantees,
claims and lawsuits
transaction, historically the Company has not made significant payments
under these indemnities.
In connection with its 2001 disposition of TELUS’ directory business,
the Company agreed to bear a proportionate share of the new owner’s
increased directory publication costs if the increased costs were to arise
from a change in the applicable CRTC regulatory requirements. The
Company’s proportionate share is 40% through May 2011 and then 15%
in the final five years, ending May 2016. As well, should the CRTC take
any action which would result in the owner being prevented from carrying
on the directory business as specified in the agreement, TELUS would
indemnify the owner in respect of any losses that the owner incurred.
As at December 31, 2010, the Company has no liability recorded in
respect of indemnification obligations.
(d) Claims and lawsuits
General: A number of claims and lawsuits (including class actions)
seeking damages and other relief are pending against the Company.
As well, the Company has received or is aware of certain potential
claims (including intellectual property infringement claims) against the
Company and, in some cases, numerous other wireless carriers and
telecommunications service providers. In some instances, the matters
are at a preliminary stage and the potential for liability and magnitude
of potential loss currently cannot be readily determined. It is impossible
at this time for the Company to predict with any certainty the outcome
of any such claims, potential claims and lawsuits. However, subject
to the foregoing limitations, management is of the opinion, based upon
legal assessment and information presently available, that it is unlikely
that any liability, to the extent not provided for through insurance or
otherwise, would be material in relation to the Company’s consolidated
financial position, excepting the items enumerated following.
Certified class actions: A class action was brought in August 2004,
under the Class Actions Act (Saskatchewan), against a number of
past and present wireless service providers including the Company.
That claim (the Frey matter) alleges that each of the carriers is in breach
of contract and has violated competition, trade practices and consumer
Total future minimum operating lease payments at December 31, 2010,
were $2,333 million. Of this amount, $2,291 million was in respect of land
and buildings; approximately 57% of this amount was in respect of the
Company’s five largest leases, all of which were for office premises over
various terms, with expiry dates which range from 2016 to 2026.
(b) Concentration of labour
In 2010, TELUS commenced collective bargaining with the Telecommu-
nications Workers Union to renew the collective agreement which expired
November 19, 2010. As at December 31, 2010, approximately 31%
(2009 – 32%) of the Company’s workforce is covered by the expired
contract with the Telecommunications Workers Union.
(c) Guarantees
Guarantees: Canadian generally accepted accounting principles
require the disclosure of certain types of guarantees and their maximum,
undiscounted amounts. The maximum potential payments represent
a worst-case scenario and do not necessarily reflect results expected
by the Company. Guarantees requiring disclosure are those obligations
that require payments contingent on specified types of future events.
In the normal course of its operations, the Company enters into obligations
that GAAP may consider to be guarantees. As defined by Canadian
GAAP, guarantees subject to these disclosure guidelines do not include
guarantees that relate to the future performance of the Company. As at
December 31, 2010, the Company’s maximum undiscounted guarantee
amounts, without regard for the likelihood of having to make such
payment, were not material.
Indemnification obligations: In the normal course of operations,
the Company may provide indemnification in conjunction with certain
transactions. These indemnification obligations range in duration
and vary in terms. Where appropriate, an indemnification obligation is
recorded as a liability. In many cases, there is no maximum limit on
these indemnification obligations and the overall maximum amount
of such indemnification obligations cannot be reasonably estimated.
Other than obligations recorded as liabilities at the time of the