Frontier Communications 2013 Annual Report Download - page 81

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Our principal payments for the next five years are as follows as of December 31, 2013:
($ in thousands)
Principal
Payments
2014 ............................................................................... $257,916
2015 ............................................................................... $259,840
2016 ............................................................................... $345,466
2017 ............................................................................... $607,375
2018 ............................................................................... $583,273
Other Obligations
During 2013, the Company contributed four real estate properties to its qualified defined benefit pension
plan. The pension plan obtained independent appraisals of the properties and, based on these appraisals, the
pension plan recorded the contributions at their fair value of $23.4 million. The Company has entered into
leases for the contributed properties for 15 years at a combined aggregate annual rent of approximately $2.1
million. The properties are managed on behalf of the pension plan by an independent fiduciary, and the terms
of the leases were negotiated with the fiduciary on an arm’s-length basis.
The contribution and leaseback of the properties was treated as a financing transaction and, accordingly,
the Company continues to depreciate the carrying value of the properties in its financial statements and no gain
or loss was recognized. An obligation of $23.4 million was recorded in our consolidated balance sheet within
“Other liabilities” for $23.3 million and within “Other current liabilities” for $0.1 million and these liabilities
will be reduced by a portion of the lease payments made to the pension plan.
During 2012, the Company entered into a sale and leaseback arrangement for a facility in Everett,
Washington and entered into a capital lease for the use of fiber in the state of Minnesota. These agreements
have lease terms of 12 and 23 years, respectively. These capital lease obligations as of December 31, 2012 are
included in our consolidated balance sheet within “Other liabilities” and “Other current liabilities.”
During 2011, the Company contributed four real estate properties to its qualified defined benefit pension
plan. The pension plan recorded the contributions at their fair value of $58.1 million and the Company entered
into a financing lease for the contributed properties for 15 years at a combined aggregate annual rent of
approximately $5.8 million.
Future minimum payments for finance lease obligations and capital lease obligations as of December 31,
2013 are as follows:
($ in thousands)
Finance Lease
Obligations
Capital Lease
Obligations
Year ending December 31:
2014 ............................................................ $ 6,891 $ 3,107
2015 ............................................................ 7,043 3,162
2016 ............................................................ 7,225 3,216
2017 ............................................................ 7,418 3,273
2018 ............................................................ 7,633 3,331
Thereafter . . . ...................................................... 70,892 18,976
Total future payments . ............................................. 107,102 35,065
Less: Amounts representing interest ................................. (63,174) (9,983)
Present value of minimum lease payments........................... $ 43,928 $25,082
F-19
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements