Windstream 2015 Annual Report Download - page 198

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-68
5. Long-term Debt and Lease Obligations, Continued:
Due to various forms of continuing involvement, including Windstream Services’ benefit from the future appreciation of the
property, the transaction has been accounted for as a failed contribution-leaseback. Accordingly, the properties continue to be
reported as assets of Windstream and depreciated over their remaining useful lives until termination of the lease agreement. We
recorded a long-term lease obligation equal to the fair value of the properties at the date of contribution. No gain or loss was
recognized on the contribution. As lease payments are made to the Windstream Pension Plan, a portion of the payment is applied
to the long-term lease obligation with the balance of the payment charged to interest expense using the effective interest method.
A summary of the current and noncurrent portions of the long-term lease obligations was as follows:
December 31, 2015 December 31, 2014
(Millions) Current Noncurrent Total Current Noncurrent Total
Assets Subject to Leaseback:
Telecommunications network assets $ 152.7 $ 4,927.7 $ 5,080.4 $ — $ — $ —
Real estate contributed to pension
plan — 72.7 72.7 — 81.0 81.0
Total $ 152.7 $ 5,000.4 $ 5,153.1 $ — $ 81.0 $ 81.0
Undiscounted future minimum payments during the initial terms of the leases were as follows for the years ended December 31:
(Millions)
Leaseback of
Telecommunications
Network Assets
Leaseback of Real
Estate Contributed to
Pension Plan Total
Year
2016 $ 653.6 $ 6.0 $ 659.6
2017 653.5 6.2 659.7
2018 655.4 6.3 661.7
2019 658.9 6.5 665.4
2020 662.2 6.7 668.9
Thereafter 6,328.5 76.3 6,404.8
Total $ 9,612.1 $ 108.0 $ 9,720.1
Capital Lease Obligations
We lease facilities and equipment for use in our operations. These facilities and equipment are included in outside communications
plant in property, plant and equipment in the accompanying consolidated balance sheets. Lease agreements that include a bargain
purchase option, transfer of ownership, contractual lease term equal to or greater than 75 percent of the remaining estimated
economic life of the leased facilities or equipment or minimum lease payments equal to or greater than 90 percent of the fair value
of the leased facilities or equipment are accounted for as capital leases in accordance with authoritative guidance for capital leases.
These capital lease obligations are included in the accompanying consolidated balance sheets within other current liabilities and
other liabilities. During 2015 and 2014, we acquired equipment under capital leases of $36.4 million and $0.5 million, respectively.