Cincinnati Bell 2009 Annual Report Download - page 145

Capital Lease Obligations
The Company leases facilities and equipment used in its operations, some of which are required to be
capitalized in accordance with ASC 840, “Leases.” This guidance requires the capitalization of leases meeting
certain criteria, with the related asset being recorded in property, plant and equipment and an offsetting amount
recorded as a liability discounted to the present value. The Company had $125.1 million and $54.3 million in
total indebtedness relating to capitalized leases at December 31, 2009 and 2008, respectively, of which $111.7
million and $47.2 million was long-term debt. Recourse under a capital lease obligation is generally limited to
the underlying assets subject to the lease. For 2009, 2008, and 2007, the Company recorded $4.3 million, $3.1
million, and $2.0 million, respectively, of interest expense related to capital lease obligations.
In December 2009, the Company sold 196 wireless towers for $99.9 million in cash proceeds, and leased
back a portion of the space on these towers for a term of 20 years. The 196 towers sold were composed of 148
towers that were sold without purchase price contingencies, and 48 towers that were sold with purchase price
contingencies related to collection of net tower rents from other tenants for amounts represented by the Company
and on which the purchase price was based.
The leaseback of a portion of the space on the towers has been classified as a capital lease for the 148 towers
sold without purchase price contingencies and will be classified as a capital lease for the 48 towers sold that are
subject to purchase price contingencies once the contingencies are resolved. For the 148 wireless towers sold
without purchase price contingencies, the capital lease liability totaled $46.7 million at December 31, 2009. For
the 48 towers sold subject to purchase price contingencies, a capital lease asset and capital lease liability of
approximately $15 million will be recorded once the contingencies have been resolved.
In addition to the tower sale-leaseback, the Company also extended by 20 years the lease term of the space
on 53 other wireless towers that were previously recorded as operating leases. This extension of the lease term
resulted in new capital leases and the Consolidated Balance Sheet includes the related capital lease asset and
capital lease liability of $22.5 million as of December 31, 2009. See Note 5 for further discussion regarding the
sale of the wireless towers.
Debt Maturity Schedule
The following table summarizes the Company’s annual principal maturities of debt and capital leases for the
five years subsequent to December 31, 2009, and thereafter:
(dollars in millions) Debt
Capital
Leases
Total
Debt
Year ended December 31,
2010 ............................................................. $ 2.4 $ 13.4 $ 15.8
2011 ............................................................. 52.0 15.2 67.2
2012 ............................................................. 236.8 7.4 244.2
2013 ............................................................. — 8.9 8.9
2014 ............................................................. 560.0 4.2 564.2
Thereafter ......................................................... 995.0 76.0 1,071.0
1,846.2 125.1 1,971.3
Net unamortized call amounts on terminated interest rate swaps .............. 14.6 — 14.6
Net unamortized discount ............................................. (6.8) — (6.8)
Total debt ....................................................... $1,854.0 $125.1 $1,979.1
Total capital lease payments including interest are expected to be $22.3 million for 2010, $23.0 million for
2011, $14.3 million for 2012, $15.3 million for 2013, $10.0 million for 2014, and $130.6 million thereafter.
The 48 wireless towers sold subject to purchase price contingencies have not been recognized as a sale
(refer to Note 5) and, accordingly, the related leaseback payments are not included in the table above. Payments
including interest for these sites are approximately $1 million annually from 2010 to 2014, and $26 million
thereafter.
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Form 10-K