Cincinnati Bell 2009 Annual Report Download - page 109

(3) Purchase obligations primarily consist of amounts under open purchase orders.
(4) Included in pension and postretirement benefit obligations are payments for the Company’s postretirement
benefits, qualified pension plans, non-qualified pension plan and other employee retirement agreements.
Amounts for 2010 include $13 million of expected cash contributions for postretirement benefits. Although
the Company currently expects to continue operating the plans past 2009, its contractual obligation related to
postretirement benefits only extends through the end of 2009. Amounts for 2010 through 2017 include $203
million of estimated cash contributions to its qualified pension plans, with $8 million expected to be
contributed in 2010. The Company’s expected qualified pension plan contributions are based on current plan
design, legislation and current actuarial assumptions. Any changes in plan design, the legislation or actuarial
assumptions will also affect the expected contribution amount.
(5) Includes contractual obligation payments primarily related to restructuring reserves, asset removal
obligations, long-term disability obligations, workers compensation liabilities, long-term incentive plan
obligations, an acquisition and liabilities for unrecognized tax benefits. Payments for unrecognized tax
benefits are assumed to occur within three to five years.
The contractual obligations table is presented as of December 31, 2009. The amount of these obligations can
be expected to change over time as new contracts are initiated and existing contracts are completed, terminated,
or modified.
Contingencies
In the normal course of business, the Company is subject to various regulatory and tax proceedings,
lawsuits, claims, and other matters. The Company believes adequate provision has been made for all such
asserted and unasserted claims in accordance with accounting principles generally accepted in the United States.
Such matters are subject to many uncertainties and outcomes that are not predictable with assurance.
Anthem Demutualization Claim
In November 2007, a class action complaint was filed against the Company and Wellpoint Inc., formerly
known as Anthem, Inc. The complaint alleges that the Company improperly received stock as a result of the
demutualization of Anthem and that a class of insured persons should have received the stock instead. In
February 2008, the Company filed a response in which it denied all liability and raised a number of defenses. In
February 2009, the Company filed a motion for summary judgment on all claims asserted against it. In March
2009, the case was dismissed.
Off-Balance Sheet Arrangements
Indemnifications
During the normal course of business, the Company makes certain indemnities, commitments, and
guarantees under which it may be required to make payments in relation to certain transactions. These include
(a) intellectual property indemnities to customers in connection with the use, sales, and/or license of products and
services, (b) indemnities to customers in connection with losses incurred while performing services on their
premises, (c) indemnities to vendors and service providers pertaining to claims based on negligence or willful
misconduct of the Company, (d) indemnities involving the representations and warranties in certain contracts,
and (e) outstanding letters of credit which totaled $24.5 million as of December 31, 2009. In addition, the
Company has made contractual commitments to several employees providing for payments upon the occurrence
of certain prescribed events. The majority of these indemnities, commitments, and guarantees do not provide for
any limitation on the maximum potential for future payments that the Company could be obligated to make.
Except for indemnification amounts recorded in relation to the sale of its national broadband business in 2003,
the Company has not recorded a liability for these indemnities, commitments, and other guarantees in the
Consolidated Balance Sheets.
Warrants
As part of the March 2003 issuance of the 16% Senior Subordinated Discount Notes due 2009 (“16%
Notes”), the purchasers of the 16% Notes received 17.5 million common stock warrants, which expire in March
2013, to purchase one share of Cincinnati Bell Inc. common stock at $3.00 each. Of the total gross proceeds
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Form 10-K