Cincinnati Bell 2009 Annual Report Download - page 154

11. Commitments and Contingencies
Commitments
Operating Leases
The Company leases certain circuits, facilities, and equipment used in its operations. Operating lease
expense was $19.3 million, $20.8 million, and $21.1 million in 2009, 2008, and 2007, respectively. Operating
leases include tower site leases that provide for renewal options with fixed rent escalations beyond the initial
lease term.
At December 31, 2009, future minimum lease payments required under operating leases, excluding certain
leases which are recorded as a restructuring liability (refer to Note 3), having initial or remaining non-cancelable
lease terms in excess of one year are as follows:
(dollars in millions)
2010 ................................. $ 8.2
2011 ................................. 8.2
2012 ................................. 7.3
2013 ................................. 6.8
2014 ................................. 6.5
Thereafter ............................. 9.9
Total ................................. $46.9
As of December 31, 2009, the Company is the lessor on building lease contracts on which it will receive
rental income of approximately $4.3 million in 2010, $4.2 million in 2011, $2.5 million in 2012, $2.1 million in
2013, $1.7 million in 2014, and $4.7 million thereafter. These amounts exclude certain subleases which are
recorded as an offset against data center lease restructuring liabilities (refer to Note 3).
Contingencies
In the normal course of business, the Company is subject to various regulatory and tax proceedings,
lawsuits, claims, and other matters. The Company believes adequate provision has been made for all such
asserted and unasserted claims in accordance with accounting principles generally accepted in the United States.
Such matters are subject to many uncertainties and outcomes that are not predictable with assurance.
Anthem Demutualization Claim
In November 2007, a class action complaint was filed against the Company and Wellpoint Inc., formerly
known as Anthem, Inc. The complaint alleges that the Company improperly received stock as a result of the
demutualization of Anthem and that a class of insured persons should have received the stock instead. In
February 2008, the Company filed a response in which it denied all liability and raised a number of defenses. In
February 2009, the Company filed a motion for summary judgment on all claims asserted against it. In March
2009, the case was dismissed.
Indemnifications
During the normal course of business, the Company makes certain indemnities, commitments, and
guarantees under which it may be required to make payments in relation to certain transactions. These include (a)
intellectual property indemnities to customers in connection with the use, sales, and/or license of products and
services, (b) indemnities to customers in connection with losses incurred while performing services on their
premises, (c) indemnities to vendors and service providers pertaining to claims based on negligence or willful
misconduct of the Company, (d) indemnities involving the representations and warranties in certain contracts,
and (e) outstanding letters of credit which totaled $24.5 million as of December 31, 2009. In addition, the
Company has made contractual commitments to several employees providing for payments upon the occurrence
of certain prescribed events. The majority of these indemnities, commitments, and guarantees do not provide for
any limitation on the maximum potential for future payments that the Company could be obligated to make.
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