| Commitments and Contingencies |
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Commitments and Contingencies |
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Rental Expense and Lease Obligations |
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As of September 30, 2011, the remaining deferred gain related to our sale-leaseback transaction
with Rock-McGraw, Inc. was $139.0 million as $3.0 million and $8.8 million was amortized during
the three and nine months ended September 30, 2011, respectively. Interest expense associated
with this operating lease for the three and nine months ended September 30, 2011 was $1.6
million and $5.0 million, respectively. |
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Legal Matters |
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The following amends the disclosure in Note 13 — Commitments and Contingencies to the
Consolidated Financial Statements of our Annual Report. |
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In connection with the Parmalat matter, on June 29, 2011, the Court issued its final
decision dismissing in its entirety Parmalat’s main damages claim which was based on the
value of the bonds issued. The Court ordered S&P to pay Parmalat the sum of
approximately euros 784,000 (approximately $1.1 million), representing the amount of
ratings fees paid to S&P by Parmalat, plus interest from the date of service of the Writ
of Summons. The Court also ordered S&P to reimburse Parmalat for euros 47,390 (less than
$0.1 million) in trial costs. The deadline for any party to file an appeal is the
earlier of one year and 45 days from the date the judgment was issued or 30 days after
any party serves a copy of the judgment on another party. |
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In connection with the Reed matter, on May 31, 2011 the Court granted Reed’s motion
to file a Second Amended Complaint that, among other things, adds a false advertising
claim under the Lanham Act, including a demand for treble damages and attorneys’ fees.
The Second Amended Complaint also contains allegations purporting to further support
Reed’s existing tort and antitrust claims. On June 3, 2011, the Court granted the
Company’s motion to file a counterclaim against Reed alleging, among other things, that
Reed misappropriated the Company’s trade secrets and engaged in unfair competition as a
result of Reed’s recruitment of former employees of the Company and use of information
about the Company’s customers obtained from the former employees to solicit those
customers. |
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The Company and Standard & Poor’s Ratings Services, together with other credit rating
agencies, have been named in numerous lawsuits in U.S. State and Federal Courts, as well
as in foreign jurisdictions, relating to the ratings activity of Standard & Poor’s
Ratings Services brought by alleged purchasers and issuers of rated securities, many of
which include novel claims that Standard & Poor’s Ratings Services is an “underwriter”
or “seller” of such securities under the Securities Act of 1933. The Company and
Standard & Poor’s Ratings Services have also received numerous subpoenas and other
government inquiries concerning the rating activity of Standard & Poor’s Ratings
Services in these areas and continue to respond to all such requests. Additional
actions, investigations or proceedings may be initiated from time to time in the future. |
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In connection with the Sullivan and Gearren matters, on October 19, 2011, the Court of Appeals for the Second
Circuit affirmed the dismissal of those cases in their entirety. |
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As previously reported in the Company’s Form 8-K filed on September 26, 2011 the
Company received on September 22, 2011 a “Wells Notice” from the staff of the U.S.
Securities and Exchange Commission (the “Commission”) stating that the staff is
considering recommending that the Commission institute a civil injunctive action against
Standard & Poor’s Ratings Services, then a division of the Company (“S&P”), alleging
violations of federal securities laws with respect to S&P’s ratings for a particular
2007 offering of collateralized debt obligations, known as “Delphinus CDO 2007-1”. The
Wells Notice is neither a formal allegation nor a finding of wrongdoing. It allows its
recipients the opportunity to provide their perspective and to address the issues raised
by the staff before any decision is made by the Commission on whether to authorize the
commencement of an enforcement proceeding against its recipients. S&P has responded to
the staff presenting its position on the issues raised and why the Commission should not
commence enforcement proceedings. |
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The Company believes that the claims asserted in the proceedings described above have no basis
and they will be vigorously defended by the Company and/or the subsidiaries involved. |
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In view of the inherent difficulty of predicting the outcome of legal matters, particularly
where the claimants seek very large or indeterminate damages, or where the cases present novel
legal theories, involve a large number of parties or are in early stages of discovery, we cannot
state with confidence what the eventual outcome of these pending matters will be, what the
timing of the ultimate resolution of these matters will be or what the eventual loss, fines,
penalties or impact related to each pending matter may be. We believe, based on our current
knowledge, the outcome of the legal actions, proceedings and investigations currently pending
should not have a material, adverse effect to the Company’s financial position, results of
operations or cash flows. |
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