Cincinnati Bell 2015 Annual Report Download - page 193

Form 10-K Part II Cincinnati Bell Inc.
entity, CyrusOne LP. As of that date, we no longer controlled CyrusOne’s operations but as a result of
maintaining significant influence, our investment was accounted for using the equity method.
Commencing January 17, 2014, we were permitted to exchange the partnership units of CyrusOne LP into
cash or shares of common stock of CyrusOne, as determined by CyrusOne, on a one-for-one basis based upon the
fair value of a share of CyrusOne common stock, subject to certain limitations which restricted the volume of
shares we are permitted to sell. The registration statement filed by CyrusOne on March 24, 2014 became
effective on April 4, 2014 and eliminated all prior limitations restricting the volume of shares we are allowed to
sell.
In the second quarter of 2014, we sold 16.0 million operating partnership units of CyrusOne LP to
CyrusOne, Inc. at a price of $22.26 per unit. The sale generated proceeds of $355.9 million and resulted in a gain
of $192.8 million.
In the second quarter of 2015, we sold 14.3 million operating partnership units of CyrusOne LP to
CyrusOne, Inc. at a price of $29.88 per unit. The sale generated proceeds of $426.0 million and resulted in a gain
of $295.2 million. We sold 6.0 million operating partnership units of CyrusOne LP to CyrusOne, Inc. at a price
of $28.41 per unit in the third quarter of 2015. Proceeds from the sale totaled of $170.3 million and resulted in a
gain of $117.7 million. In the fourth quarter of 2015, we sold 1.4 million shares of CyrusOne’s common stock at
a price of $35.30 per share. The sale generated proceeds of $47.6 million and resulted in a gain of $36.3 million.
Concurrent with the fourth quarter sale, we exchanged all of our remaining 6.3 million operating partnership
units in CyrusOne LP for an equal number of newly issued shares of common stock of CyrusOne Inc.
As of December 31, 2015, we owned 9.5% of CyrusOne, which was held in the form of 6.9 million shares
of registered common stock of CyrusOne Inc. Effective with the conversion of our LP shares to common stock,
our investment in CyrusOne is accounted for using the cost method as we no longer have significant influence
over CyrusOne or any of its subsidiaries. For the years ended December 31, 2015, 2014, and 2013, our equity
method share of CyrusOne’s net loss was $5.1 million, $7.0 million, and $10.7 million, respectively. As of
December 31, 2015, the fair value of this investment was $257.9 million based on the quoted market price of
CyrusOne’s common stock, which is considered a Level 1 measurement in the fair value hierarchy.
Summarized financial information for the CyrusOne Consolidated Statements of Operations for the years
ended December 31, 2015, 2014, and 2013 and Consolidated Balance Sheets as of December 31, 2015 and 2014
is as follows:
(dollars in millions)
Year Ended
December 31, 2015
Year Ended
December 31, 2014
January 24, 2013 to
December 31, 2013
Revenue ...................................... $399.3 $330.9 $248.4
Operating income ............................... 22.8 40.0 28.9
Net loss ....................................... (20.2) (14.5) (15.6)
(dollars in millions)
December 31,
2015
December 31,
2014
Net investment in real estate ............................................. $1,392.0 $1,051.4
Total assets ........................................................... 2,195.6 1,571.0
Total liabilities ........................................................ 1,374.0 854.0
Transactions with CyrusOne
Revenues — The Company records service revenue from CyrusOne under contractual service arrangements
which include, among others, providing services such as fiber transport, network support, service calls,
monitoring and management, storage and back-up, and IT systems support.
Operating Expenses — We lease data center and office space from CyrusOne at certain locations in our
operating territory under operating leases and are also billed for other services provided by CyrusOne under
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Form 10-K