Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

Commitments and Contingencies
12 Months Ended
Dec. 31, 2013
Commitments and Contingencies  
Commitments and Contingencies

(17)  Commitments and Contingencies


Contractual Obligations


Future minimum lease payments under scheduled operating leases, which are primarily for buildings and equipment, having initial or remaining noncancelable terms in excess of one year are as follows (in thousands):


Year ended December 31:





























Minimum lease commitments






Rent expense was approximately $2,262,000, $1,855,000 and $1,865,000 for the years ended December 31, 2013, 2012 and 2011, respectively.




The Company is involved in litigation and similar claims incidental to the conduct of its business, including from time to time, contractual disputes, claims related to alleged security system failures and claims related to alleged violations of the U.S. Telephone Consumer Protection Act. Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, management’s estimate of the outcomes of such matters and experience in contesting, litigating and settling similar matters.  In management’s opinion, none of the pending actions is likely to have a material adverse impact on the Company’s financial position or results of operations.  The Company accrues and expenses legal fees related to loss contingency matters as incurred.


Based on events occurring in the State of Georgia in 2006, a monitoring service subscriber filed suit against the Company and Tel-Star Alarms, Inc., an authorized dealer, alleging negligence.  On November 16, 2011, a Georgia trial court awarded the plaintiff $8,600,000, of which $6,000,000 was covered by the Company’s general liability insurance policies.  At that time, the Company funded approximately $2,640,000 into an escrow account for the excess liability above the insurance coverage.  In July 2013, the trial court’s ruling was affirmed by the Georgia Court of Appeals and, in November 2013, the Georgia Supreme Court denied our appeal.  Upon the denial, the funded escrow account was released to the plaintiff and the Company’s insurance provider settled the remaining liability due.