Cincinnati Bell 2004 Annual Report Download - page 119

(dollars in millions) Payments Due by Period
Total < 1 Year 1–3 Years 4–5 Years Thereafter
Debt, excluding unamortized discount . . $2,159.5 $25.9 $225.5 $584.2 $1,323.9
Capital leases, excluding interest ........ 15.6 4.2 3.8 1.4 6.2
Noncancelable operating lease
obligations* .......................... 183.0 9.0 15.3 14.5 144.2
Unconditional purchase obligations** . . . 201.8 51.3 64.9 58.5 27.1
Total .................................... $2,559.9 $90.4 $309.5 $658.6 $1,501.4
* Rent expense under operating leases are recognized on a straight-line basis over the respective terms of the
leases, including option renewal periods if renewal of the lease is reasonably assured.
** Amount includes $2.5 million and $9.2 million of expected cash funding contributions to the pension trust
and postretirement trust, respectively. These amounts are included in 2005 as the Company is obligated to
make these cash funding contributions. The Company has not included obligations beyond 2005, as the
amounts are not estimable.
Current maturities of long-term debt of $30.1 million at December 31, 2004 consisted of approximately $24.3
million in scheduled principal payments on long-term debt and $1.6 million of other current debt in addition
to $4.2 million related to the current portion of capital leases. The Company expects to have the ability to
meet its current debt obligations through cash flows generated by its operations.
Cingular Wireless Corporation (“Cingular”), through its subsidiary AT&T PCS LLC (“AWE”), maintains a
19.9% ownership in the Company’s CBW subsidiary. In response to the acquisition (the “Merger”) of AWE by
Cingular announced on February 17, 2004, the Company entered into an agreement on August 4, 2004 with a
subsidiary of Cingular whereby the parties restructured the CBW joint venture effective on October 26, 2004,
the date of consummation of the Merger (as subsequently amended, the “Agreement”). Specifically, under the
Agreement, the Company has a right to purchase AWE’s interest in CBW at a price of $85.0 million if
purchased at any time prior to January 31, 2006, plus interest at an annual rate of 5%, compounded monthly,
from the date of the Agreement. Thereafter, the Company may purchase the minority interest for $83.0
million, beginning on January 31, 2006 plus interest at an annual rate of 5%, compounded monthly, thereafter.
In addition, at any time beginning on January 31, 2006 (or earlier, if the member committee calls for
additional capital contributions which call has not been approved by AWE or Cingular), AWE or Cingular has
a right to require the Company to purchase its interest in CBW at the purchase price of $83.0 million, plus
interest at an annual rate of 5%, compounded monthly, from January 31, 2006 if the purchase has not closed
prior to such date.
Other
As of the date of this filing, the Company maintains the following credit ratings:
Entity Description Standard and Poor’s
Fitch
Rating Service
Moody’s
Investor Service
CBB .............................. Corporate Credit Rating BB- BB- Ba3
CBT .............................. Corporate Credit Rating B+ BB+ Ba2
CBB .............................. Outlook negative stable positive
The Company does not have any downgrade triggers that would accelerate the maturity dates of its debt
or increase the interest rate on its debt.
On November 3, 2004, the Company announced that it was in the process of finalizing a restructuring
plan to improve its operating efficiency and more effectively align its cost structure with future business
opportunities. The restructuring plan includes a workforce reduction that will be implemented in stages which
began in the fourth quarter 2004 and expect to continue through December 31, 2006.
The workforce reduction will be accomplished primarily through attrition and a special retirement
incentive, which the Company offered to management and union employees meeting certain age and years of
service criteria. Eligible employees wishing to take advantage of the special retirement incentive had to
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Form 10-K