Cincinnati Bell 2013 Annual Report Download - page 258

Form 10-K/A Part IV Cincinnati Bell Inc.
CyrusOne Inc. and CyrusOne LP
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS—(continued)
December 31, 2012. Historically, we have recorded a full valuation allowance on our net foreign deferred tax
assets related to our foreign generated net operating losses due to the uncertainty of their realization. In 2013,
management determined it was necessary to record a full valuation allowance on all of our domestic and foreign
net deferred tax assets due to the uncertainty of their realization. At December 31, 2012, the net deferred
domestic assets were $0.5 million, with no such balance recorded at December 31, 2013.
20. Commitments and Contingencies
Operating Leases
We lease certain data center facilities and equipment from third parties. Operating lease expense was $6.5
million, $0.2 million, $5.9 million and $5.7 million for the periods ended December 31, 2013, and January 23,
2013 and years ended December 31, 2012 and 2011, respectively. Certain of these 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-cancelable lease terms in excess of one year are as follows:
(Dollars in millions)
2014 ................................................................................. $4.4
2015 ................................................................................. 1.8
2016 ................................................................................. 0.7
2017 ................................................................................. —
2018 ................................................................................. —
Thereafter ............................................................................. 1.0
Total ................................................................................. $7.9
Performance Guarantees
Customer contracts generally require specified levels of performance related to uninterrupted service and
cooling temperatures. If these performance standards are not met, we could be obligated to issue billing credits to
the customer. Management assesses the probability that a performance standard will not be achieved. As of
December 31, 2013 and 2012, no amounts had been accrued for performance guarantees.
Indemnifications
During the normal course of business, CyrusOne has made certain indemnities, commitments and
guarantees under which it may be required to make payments in relation to certain transactions. These include
(i) intellectual property indemnities to customers in connection with the use, sale, and/or license of products and
services, (ii) indemnities to vendors and service providers pertaining to claims based on negligence or willful
misconduct and (iii) indemnities involving the representations and warranties in certain contracts. The majority
of these indemnities, commitments and guarantees do not provide for any limitation on the maximum potential
for future payments that we could be obligated to make.
Purchase Commitments
CyrusOne has non-cancelable purchase commitments related to certain services. These agreements range
from one to two years and provide for payments for early termination or require minimum payments for the
remaining term. As of December 31, 2013, the minimum commitments for these arrangements were $16.1
million. We also have purchase orders and contracts related to construction of data center facilities and
equipment. We generally have the right to cancel open purchase orders prior to delivery and to terminate the
contracts without cause.
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