Frontier Communications 2014 Annual Report Download - page 82

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Our future principal payments are as follows as of December 31, 2014:
($ in thousands)
Principal
Payments
2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 297,622
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 383,248
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 645,156
2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 619,035
2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 644,565
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,191,110
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 million. The Company
has entered into leases for the contributed properties with initial terms of 15 years at a combined
aggregate annual rent of approximately $2 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 $23 million was recorded in our
consolidated balance sheet within “Other liabilities” and the liability will be reduced annually by a
portion of the lease payments made to the pension plan.
During 2012, the Company entered into a sale and leaseback arrangement for a facility in Everett,
Washington and entered into a capital lease for the use of fiber in the state of Minnesota. These
agreements have lease terms of 12 and 23 years, respectively. These capital lease obligations are
included in our consolidated balance sheet within “Other liabilities” and “Other current liabilities.”
Future minimum payments for finance lease obligations and capital lease obligations as of
December 31, 2014 are as follows:
($ in thousands)
Finance Lease
Obligations
Capital Lease
Obligations
Year ending December 31:
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,043 $ 3,245
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,225 3,300
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,418 3,357
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,632 3,415
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,838 3,474
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,055 16,790
Total future payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,211 33,581
Less: Amounts representing interest. . . . . . . . . . . . . . . . . . . . . . . . . . (56,951) (9,092)
Present value of minimum lease payments . . . . . . . . . . . . . . . . . . . $ 43,260 $24,489
F-21
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements