Cincinnati Bell 2013 Annual Report Download - page 176

8. Commitments and Contingencies
Operating Lease Commitments
The Company leases certain circuits, facilities, and equipment used in its operations. Operating lease
expense was $13.4 million, $19.3 million, and $20.4 million in 2013, 2012, and 2011, respectively. In 2013, $0.3
million of the operating lease expense is associated with CyrusOne as it was included for the first 23 days of
January prior to its IPO. In 2012 and 2011, CyrusOne operating lease expense was $5.9 million and $5.3 million,
respectively. Certain facility leases and tower site leases provide for renewal options with fixed rent escalations
beyond the initial lease term.
At December 31, 2013, future minimum lease payments required under operating leases having initial or
remaining non-cancellable lease terms for the next five years are as follows:
(dollars in millions)
2014 ............................................................................. $ 10.9
2015 ............................................................................. 8.1
2016 ............................................................................. 4.5
2017 ............................................................................. 2.6
2018 ............................................................................. 1.1
Thereafter ......................................................................... 1.1
Total ............................................................................. $ 28.3
Asset Retirement Obligations
Asset retirement obligations exist for leased wireless towers and certain other assets. The following table
presents the activity for the Company’s asset retirement obligations, which are included in “Other noncurrent
liabilities” in the Consolidated Balance Sheets:
December 31,
(dollars in millions) 2013 2012
Balance, beginning of period ........................................................ $7.1 $5.4
Liabilities settled ................................................................. (0.1) —
Liabilities incurred ................................................................ 0.1 0.2
Revisions to estimated cash flow ..................................................... 1.1 1.1
Accretion expense ................................................................ 0.5 0.4
Deconsolidation of CyrusOne ....................................................... (0.2) —
Balance, end of period ............................................................. $8.5 $7.1
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, sale, 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 $5.2 million as of December 31, 2013. 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.
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Form 10-K Part II Cincinnati Bell Inc.