Cincinnati Bell 2001 Annual Report Download - page 53

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8. COMMON AND PR E F ERRED SHARE S
COMMON SHARES
The par value of the Company’s common shares is $.01 per share.
At December 31, 2001 and 2000, common shares outstanding
were 218.1 million and 215.5 million, respectively. In July 1999, the
Company’s Board of Directors approved a share repurchase pro-
gram authorizing the repurchase of up to $200 million of common
shares of the Company. The 218.1 million shares of Company com-
mon shares outstanding at December 31, 2001, are net of
approximately 7.8 million shares that were repurchased by the
Company during 1999 at a cost of $145.1 million.
PREFERRED SHARE PURCHASE RIGHTS PLAN
In the first quarter of 1997, the Company’s Board of Directors
adopted a Share Purchase Rights Plan by granting a dividend of
one preferred share purchase right for each outstanding com-
mon share to shareowners of record at the close of business on
May 2, 1997. Under certain conditions, each right entitles the
holder to purchase one-thousandth of a Series A Preferred
Share. The rights cannot be exercised or transferred apart from
common shares, unless a person or group acquires 15% or
more of the Company’s outstanding common shares. The rights
will expire May 2, 2007, if they have not been redeemed.
PREFERRED SHARES
The Company is authorized to issue up to four million voting pre-
ferred shares and one million nonvoting preferred shares.
In connection with the Merger, the Company issued
155,250 shares of 63⁄4% cumulative convertible preferred stock
at a par value of $1,000. These shares were subsequently con-
verted into 3,105,000 depository shares bearing a par value of
$50 per share. Shares of this preferred stock can be converted
at any time at the option of the holder into common stock of the
Company at a conversion rate of 1.44 shares of Company com-
mon stock per depository share of 63⁄4% convertible preferred
stock. Dividends on the 63⁄4% convertible preferred stock are
payable quarterly in arrears in cash or common stock. The liqui-
dation preference on the 63⁄4% preferred shares is the par value
or $50 per share.
Also in connection with the Merger, the Company issued
approximately 1,074,000 shares of 71⁄4% junior convertible pre-
ferred stock due 2007 valued at $234.5 million. As of
December 31, 1999 approximately 1,058,000 shares remained
outstanding and had a carrying value of $228.6 million. Pursuant
to the Company’s March 21, 2000 redemption offer, the out-
standing preferred shares were converted into common shares
of the Company at a rate of 8.945 common shares for each pre-
ferred share, creating approximately 9.5 million additional common
shares in April of 2000. Approximately 100 preferred shares were
redeemed for an immaterial amount of cash in order to complete
the Company’s obligations related to this preferred stock.
7. MINORITY INTEREST
December 31
($ in millions) 2001 2000
Minority interest consists of:
121⁄2% Exchangeable Preferred Stock $417.8 $421.0
Minority Interest in Cincinnati Bell
Wireless held by AWS 15.5 10.2
Other 2.4 2.6
Total $435.7 $433.8
Broadwing Communications has approximately 395,000 shares
of 121⁄2% Junior Exchangeable Preferred Stock (“121⁄2%
Preferreds”) outstanding. The 121⁄2% Preferreds are mandatorily
redeemable on August 15, 2009 at a price equal to their liquidation
preference of $1,000 a share, plus accrued and unpaid dividends.
Through November 15, 1999, dividends on the 121⁄2% Preferreds
were being effected through additional shares of the 121⁄2%
Preferreds. On November 16, 1999, the Company converted to a
cash pay option for these dividends. Dividends on the 121⁄2%
Preferreds are classified as “Minority interest expense (income)” in
the Consolidated Statements of Operations and Comprehensive
Income (Loss) and consisted of $49 million in both 2001 and
2000. At the Merger date, and as part of purchase accounting, the
121⁄2% Preferreds were adjusted to a fair market value exceeding
the redemption value. As such, the accretion of the difference
between the new carrying value and the mandatory redemption
value is treated as an offsetting reduction to minority interest
expense over the remaining life of the preferred stock.
AT&T Wireless Services Inc. (“AWS”) maintains a 19.9% owner-
ship in the Company’s Cincinnati Bell Wireless LLC (“CBW”)
subsidiary. The balance is adjusted as a function of AWS’s 19.9%
share of the operating income (or loss) of CBW, with an offsetting
amount being reflected in the Consolidated Statements of
Operations and Comprehensive Income (Loss) under the caption
“Minority interest expense (income)”.