Form 8-K CINCINNATI BELL INC For: Aug 04

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 8/16/2026

1. AMAT
2. GLOB
3. SPY
4. RDDT
5. SNDK
6. HTFL
7. ADYEN:NA
8. DVLT
9. ADYYF
10. WDAY

August 4, 2016 7:06 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 4, 2016


 
CINCINNATI BELL INC.
(Exact Name of Registrant as Specified in its Charter)

 
 
 
 
 
 
 
Ohio
 
001-8519
 
31-1056105
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
221 East Fourth Street
Cincinnati, OH 45202
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (513) 397-9900
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Section 2 - Financial Information

Item 2.02     Results of Operations and Financial Condition

On August 4, 2016, Cincinnati Bell Inc. reported its financial results for the second quarter 2016. The earnings release is attached as Exhibit 99.1.
 
Section 7 - Regulation FD
 
Item 7.01     Regulation FD Disclosure
 
On August 4, 2016, Theodore H. Torbeck, the Company's president and chief executive officer, and Leigh R. Fox, the Company's chief financial officer, will present second quarter 2016 results. The presentation will be webcast both live and on-demand. To listen, go to the Investor Relations section of www.cincinnatibell.com, click on the Webcasts/Presentations tab and follow the instructions for accessing the webcast.
A copy of the presentation to be made during the meeting is attached to this Current Report as Exhibit 99.2.
The information in Items 2.02 and 7.01 and the exhibits attached to this Current Report as Exhibit 99.1 and 99.2 are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934 or otherwise subject to the liabilities of that Section nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Act of 1934, except as shall be expressly stated by specific reference in such filing.
 
Item 9.01    Financial Statements and Exhibits.

(c)
Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 99.1
Press release dated August 4, 2016
 
 
 
 
Exhibit 99.2
Presentation made during the Cincinnati Bell second quarter 2016 earnings conference call on August 4, 2016





Cautionary Statement Concerning Forward-Looking Statements


This report and the documents incorporated by reference herein contain forward-looking statements regarding future events and results that are subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” or variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, anticipated growth and trends in businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents the company filed with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements for any reason. The forward-looking statements included in this report represent company estimates as of August 4, 2016. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
 
CINCINNATI BELL INC.
 
 
 
 
 
Date:
August 4, 2016
 
By:
/s/ Christopher J. Wilson
 
 
 
 
Christopher J. Wilson
 
 
 
 
Vice President, General Counsel and Secretary



EXHIBIT INDEX

Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
99.1
Press release dated August 4, 2016
 
 
99.2
Presentation made during the Cincinnati Bell second quarter 2016 earnings conference call on August 4, 2016





Cincinnati Bell Reports Second Quarter 2016 Results

HIGHLIGHTS
•
Consolidated revenue increased $13 million over the prior year - revenue from strategic products was up 21 percent compared to the prior year
•
Entertainment and Communications revenue totaled $193 million, up $10 million from a year ago - Fioptics revenue was up 37 percent compared to the prior year
•
Net income totaled $78 million, resulting in diluted earnings per share of $0.36
•
Strong second quarter Adjusted EBITDA1 of $76 million, up 2 percent compared to the prior year

CINCINNATI - August 4, 2016 - Cincinnati Bell Inc. (NYSE: CBB) today announced financial results for the second quarter of 2016, highlighted by year-over-year consolidated revenue and Adjusted EBITDA growth. Operating income totaled $27 million in the second quarter of 2016, compared to $30 million in the prior year. Strategic revenues totaled $158 million, increasing 21 percent over the prior year on strong demand for IT services and fiber products. Fioptics video subscribers totaled 126,800 at the end of the quarter, up 25 percent compared to a year ago. Total internet subscribers were 296,700, an increase of 21,600 compared to the prior year. In the second quarter, 25,000 additional units were passed with Fioptics, which is now available to 478,700 addresses, or approximately 60 percent of Greater Cincinnati.

“Our impressive second quarter results demonstrate this team's ability to consistently exceed expectations. Based on our strong performance, we are confident in achieving our full-year financial guidance," said Ted Torbeck, president and chief executive officer.

CONSOLIDATED RESULTS2  
Consolidated revenue for the second quarter of 2016 was $299 million, up 5 percent from the prior year. Operating income for the quarter totaled $27 million and Adjusted EBITDA equaled $76 million. Net income was $78 million, resulting in diluted earnings per share of $0.36. In the second quarter, we recognized a $119 million gain on the sale of 3 million CyrusOne common shares and a $5 million loss on the extinguishment of $86 million of debt.

Entertainment and Communications Segment
•
Entertainment and Communications revenue for the quarter totaled $193 million, up $10 million compared to the prior year.
◦
Fioptics revenue for the quarter was $62 million, up 37 percent from the prior year.
◦
Strategic revenue for business and carrier markets totaled $49 million (including $3 million of Fioptics revenue) for the quarter, up $7 million year-over-year.




•
Operating income totaled $27 million in the second quarter, compared to $30 million in the prior year.
•
Adjusted EBITDA for the quarter was $73 million, up 3 percent year-over-year.

IT Services and Hardware Segment
•
Revenue of $110 million for the quarter was up 3 percent over the prior year.
◦
Strategic revenue was $49 million in the quarter, up 10 percent compared to the prior year.
◦
Telecom and IT hardware revenue was $54 million for the quarter, compared to $56 million in the second quarter of 2015.
•
Operating income totaled $7 million for the quarter, up $1 million compared to the prior year.
•
Adjusted EBITDA was $10 million, up 6 percent compared to a year ago.

2016 Outlook
Cincinnati Bell reaffirms its financial guidance for 2016:
Category
2016 Guidance
Revenue
$1.2 billion
Adjusted EBITDA
$303 million*
*Plus or minus 2 percent




Conference Call/Webcast
Cincinnati Bell will host a conference call on August 4 at 10:00 a.m. (ET) to discuss its results for the second quarter of 2016. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. The conference call dial-in number is (888) 634-7543. Callers located outside of the U.S. and Canada may dial (719) 325-2336. A taped replay of the conference call will be available approximately one hour after the conclusion of the call until 1:00 p.m. on Thursday, August 18, 2016. For U.S. callers, the replay will be available at (888) 203-1112. For callers outside of the U.S. and Canada, the replay will be available at (719) 457-0820. The replay reference number is 6440436. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.

Safe Harbor Note
This release and the documents incorporated by reference herein contain forward-looking statements regarding future events and our future results that are subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents we file with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.





Use of Non-GAAP Financial Measures
This press release contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt, net income excluding special items and free cash flow. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com.
 
1Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP operating income plus depreciation, amortization, restructuring charges, (gain) loss on sale or disposal of assets, transaction costs, curtailment gain (loss), asset impairments, components of pension and other retirement plan costs (including interest costs, asset returns, and amortization of actuarial gains and losses), and other special items. Adjusted EBITDA should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.

2Consolidated Results for the three and six months ended June 30, 2015 report our former wireless segment results as discontinued operations. Effective March 31, 2015, the Company no longer provides wireless services.

Adjusted EBITDA margin provides a useful measure of operational performance. The company defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Adjusted EBITDA margin should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.

Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as cash provided by (used in) operating, financing and investing activities, adjusted for the issuance and repayment of debt, debt issuance costs, the repurchase of common stock, and the proceeds from the sale or the use of funds from the purchase of business operations, including transaction costs. Free cash flow should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities, or the change in cash on the balance sheet and may not be comparable with free cash flow as defined by other companies. Although the company feels that there is no comparable GAAP measure for free cash flow, the attached financial information reconciles free cash flow to the net increase (decrease) in cash and cash equivalents.





Net debt provides a useful measure of liquidity and financial health. The company defines net debt as the sum of the face amount of short-term and long-term debt, unamortized premium and/or discount and note issuance costs, offset by cash and cash equivalents.

Net income excluding special items in total and per share provides a useful measure of operating performance. Net income excluding special items should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with net income excluding special items as defined by other companies.

About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell Inc. (CBB) provides integrated communications solutions – including local and long distance voice, data, high-speed Internet and video – that keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world. In addition, enterprise customers across the United States rely on CBTS, a wholly-owned subsidiary, for efficient, scalable office communications systems and end-to-end IT solutions. For more information, please visit www.cincinnatibell.com.




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
 
2016
 
2015
 
$
 
%
 
2016
 
2015
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
299.2

 
$
285.8

 
$
13.4

 
5%
 
$
588.1

 
$
578.7

 
$
9.4

 
2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
170.8

 
162.2

 
8.6

 
5%
 
333.5

 
328.4

 
5.1

 
2%
 
 
Selling, general and administrative
 
56.2

 
57.0

 
(0.8
)
 
(1)%
 
109.4

 
109.2

 
0.2

 
0%
 
 
Depreciation and amortization
 
44.8

 
34.0

 
10.8

 
32%
 
88.2

 
66.6

 
21.6

 
32%
 
 
Other
 
—

 
2.9

 
(2.9
)
 
n/m
 
—

 
7.7

 
(7.7
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
27.4

 
29.7

 
(2.3
)
 
(8)%
 
57.0

 
66.8

 
(9.8
)
 
(15)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
19.9

 
28.0

 
(8.1
)
 
(29)%
 
40.2

 
60.7

 
(20.5
)
 
(34)%
 
Loss on extinguishment of debt
 
5.2

 
13.5

 
(8.3
)
 
(61)%
 
2.8

 
13.5

 
(10.7
)
 
(79)%
 
Gain on sale of CyrusOne investment
 
(118.6
)
 
(295.2
)
 
176.6

 
(60)%
 
(118.6
)
 
(295.2
)
 
176.6

 
(60)%
 
Other (income) expense, net
 
(1.1
)
 
1.3

 
(2.4
)
 
n/m
 
(1.1
)
 
4.8

 
(5.9
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
 
122.0

 
282.1

 
(160.1
)
 
(57)%
 
133.7

 
283.0

 
(149.3
)
 
(53)%
 
Income tax expense
 
44.4

 
101.4

 
(57.0
)
 
(56)%
 
49.1

 
102.0

 
(52.9
)
 
(52)%
 
Income from continuing operations
 
77.6

 
180.7

 
(103.1
)
 
(57)%
 
84.6

 
181.0

 
(96.4
)
 
(53)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from discontinued operations (net of tax)
 
—

 
10.9

 
(10.9
)
 
n/m
 
—

 
59.8

 
(59.8
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
77.6

 
191.6

 
(114.0
)
 
(59)%
 
84.6

 
240.8

 
(156.2
)
 
(65)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends *
 
2.6

 
2.6

 
—

 
0%
 
5.2

 
5.2

 
—

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
 
$
75.0

 
$
189.0

 
$
(114.0
)
 
(60)%
 
$
79.4

 
$
235.6

 
$
(156.2
)
 
(66)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net earnings per common share
 


 

 
 
 
 
 


 


 
 
 
 
 
 
 
Earnings from continuing operations
 
$
0.36

 
$
0.85

 
 
 
 
 
$
0.38

 
$
0.84

 
 
 
 
 
 
 
Earnings from discontinued operations
 
—

 
0.05

 
 
 
 
 
—

 
0.29

 
 
 
 
 
Basic net earnings per common share
 
$
0.36


$
0.90

 
 
 
 
 
$
0.38


$
1.13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net earnings per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from continuing operations
 
$
0.36

 
$
0.84

 
 
 
 
 
$
0.38

 
$
0.84

 
 
 
 
 
 
 
Earnings from discontinued operations
 
—

 
0.05

 
 
 
 
 
—

 
0.28

 
 
 
 
 
Diluted net earnings per common share
 
$
0.36

 
$
0.89

 
 
 
 
 
$
0.38

 
$
1.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Basic
 
209.8

 
209.7

 
 
 
 
 
209.9

 
209.4

 
 
 
 
 
 
 - Diluted
 
210.4

 
214.6

 
 
 
 
 
210.4

 
210.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Calculation of diluted earnings per common share for the three months ended June 30, 2015 excludes preferred stock dividends as the preferred shares are considered converted.





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Statements by Segment
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
2016

2015
 
$
 
%
 
2016
 
2015
 
$
 
%
 
Entertainment and Communications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
86.8

 
$
78.8

 
$
8.0

 
10%
 
$
172.0

 
$
160.0

 
$
12.0

 
8%
 
 
Voice
 
69.1

 
73.5

 
(4.4
)
 
(6)%
 
139.3

 
149.2

 
(9.9
)
 
(7)%
 
 
Video
 
30.9

 
22.9

 
8.0

 
35%
 
59.9

 
44.3

 
15.6

 
35%
 
 
Services and Other
 
5.7

 
7.2

 
(1.5
)
 
(21)%
 
11.6

 
17.0

 
(5.4
)
 
(32)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
192.5

 
182.4

 
10.1

 
6%
 
382.8

 
370.5

 
12.3

 
3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
88.3

 
80.1

 
8.2

 
10%
 
176.1

 
161.6

 
14.5

 
9%
 
 
Selling, general and administrative
 
35.4

 
39.8

 
(4.4
)
 
(11)%
 
70.0

 
74.8

 
(4.8
)
 
(6)%
 
 
Depreciation and amortization
 
41.6

 
31.0

 
10.6

 
34%
 
81.8

 
60.5

 
21.3

 
35%
 
 
Other*
 
—

 
1.4

 
(1.4
)
 
n/m
 
—

 
2.2

 
(2.2
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
165.3

 
152.3

 
13.0

 
9%
 
327.9

 
299.1

 
28.8

 
10%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
27.2

 
$
30.1

 
$
(2.9
)
 
(10)%
 
$
54.9

 
$
71.4

 
$
(16.5
)
 
(23)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IT Services and Hardware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
$
27.2

 
$
27.0

 
$
0.2

 
1%
 
$
53.4

 
$
51.1

 
$
2.3

 
5%
 
 
Management and Monitoring
 
7.9

 
7.6

 
0.3

 
4%
 
16.0

 
14.9

 
1.1

 
7%
 
 
Unified Communications
 
10.1

 
9.1

 
1.0

 
11%
 
20.2

 
18.7

 
1.5

 
8%
 
 
Cloud Services
 
10.8

 
7.0

 
3.8

 
54%
 
21.0

 
13.1

 
7.9

 
60%
 
 
Telecom and IT hardware
 
53.8

 
55.6

 
(1.8
)
 
(3)%
 
101.7

 
116.1

 
(14.4
)
 
(12)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
109.8


106.3

 
3.5

 
3%
 
212.3

 
213.9

 
(1.6
)
 
(1)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
85.5

 
83.5

 
2.0

 
2%
 
164.1

 
169.9

 
(5.8
)
 
(3)%
 
 
Selling, general and administrative
 
14.2

 
13.3

 
0.9

 
7%
 
27.7

 
26.7

 
1.0

 
4%
 
 
Depreciation and amortization
 
3.2

 
3.0

 
0.2

 
7%
 
6.4

 
6.1

 
0.3

 
5%
 
 
Other*
 
—

 
0.3

 
(0.3
)
 
n/m
 
—

 
3.9

 
(3.9
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
102.9

 
100.1

 
2.8

 
3%
 
198.2

 
206.6

 
(8.4
)
 
(4)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
6.9

 
$
6.2

 
$
0.7

 
11%
 
$
14.1

 
$
7.3

 
$
6.8

 
93%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Other includes restructuring charges, loss on sale or disposal of assets (net) and a curtailment loss.





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
 
2016
 
2015
 
$
 
%
 
2016
 
2015
 
$
 
%
Entertainment and Communications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
25.2

 
$
17.3

 
$
7.9

 
46%
 
$
48.7

 
$
33.2

 
$
15.5

 
47%
 
 
 
Voice
 
5.4

 
4.8

 
0.6

 
13%
 
10.6

 
9.6

 
1.0

 
10%
 
 
 
Video
 
30.4

 
22.5

 
7.9

 
35%
 
58.9

 
43.5

 
15.4

 
35%
 
 
 
Services and other
 
0.9

 
0.9

 
—

 
0%
 
1.8

 
1.9

 
(0.1
)
 
(5)%
 
 
 
 
 
61.9

 
45.5

 
16.4

 
36%
 
120.0

 
88.2

 
31.8

 
36%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
11.8

 
12.6

 
(0.8
)
 
(6)%
 
24.0

 
25.9

 
(1.9
)
 
(7)%
 
 
 
Voice
 
18.7

 
21.8

 
(3.1
)
 
(14)%
 
38.5

 
44.8

 
(6.3
)
 
(14)%
 
 
 
Services and other
 
1.1

 
1.2

 
(0.1
)
 
(8)%
 
2.2

 
2.6

 
(0.4
)
 
(15)%
 
 
 
 
 
31.6

 
35.6

 
(4.0
)
 
(11)%
 
64.7

 
73.3

 
(8.6
)
 
(12)%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Services and other
 
1.0

 
1.6

 
(0.6
)
 
(38)%
 
2.1

 
5.1

 
(3.0
)
 
(59)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total consumer revenue
 
$
94.5

 
$
82.7

 
$
11.8

 
14%
 
$
186.8

 
$
166.6

 
$
20.2

 
12%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
24.0

 
$
22.0

 
$
2.0

 
9%
 
$
47.6

 
$
43.9

 
$
3.7

 
8%
 
 
 
Voice
 
12.5

 
10.7

 
1.8

 
17%
 
24.5

 
20.6

 
3.9

 
19%
 
 
 
Video
 
0.5

 
0.4

 
0.1

 
25%
 
1.0

 
0.8

 
0.2

 
25%
 
 
 
Services and other
 
0.5

 
0.6

 
(0.1
)
 
(17)%
 
0.9

 
1.3

 
(0.4
)
 
(31)%
 
 
 
 
 
37.5

 
33.7

 
3.8

 
11%
 
74.0

 
66.6

 
7.4

 
11%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
5.1

 
5.9

 
(0.8
)
 
(14)%
 
10.5

 
12.0

 
(1.5
)
 
(13)%
 
 
 
Voice
 
28.4

 
31.1

 
(2.7
)
 
(9)%
 
57.4

 
63.3

 
(5.9
)
 
(9)%
 
 
 
Services and other
 
0.3

 
0.4

 
(0.1
)
 
(25)%
 
0.6

 
0.8

 
(0.2
)
 
(25)%
 
 
 
 
 
33.8

 
37.4

 
(3.6
)
 
(10)%
 
68.5

 
76.1

 
(7.6
)
 
(10)%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Services and other
 
0.5

 
0.7

 
(0.2
)
 
(29)%
 
0.9

 
1.5

 
(0.6
)
 
(40)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total business revenue
 
$
71.8

 
$
71.8

 
$
—

 
0%
 
$
143.4

 
$
144.2

 
$
(0.8
)
 
(1)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrier
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
11.6

 
$
8.6

 
$
3.0

 
35%
 
$
22.6

 
$
19.2

 
$
3.4

 
18%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
9.1

 
12.4

 
(3.3
)
 
(27)%
 
18.6

 
25.8

 
(7.2
)
 
(28)%
 
 
 
Voice
 
4.1

 
5.1

 
(1.0
)
 
(20)%
 
8.3

 
10.9

 
(2.6
)
 
(24)%
 
 
 
Services and other
 
1.4

 
1.8

 
(0.4
)
 
(22)%
 
3.1

 
3.8

 
(0.7
)
 
(18)%
 
 
 
 
 
14.6

 
19.3

 
(4.7
)
 
(24)%
 
30.0

 
40.5

 
(10.5
)
 
(26)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total carrier revenue
 
$
26.2

 
$
27.9

 
$
(1.7
)
 
(6)%
 
$
52.6

 
$
59.7

 
$
(7.1
)
 
(12)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Entertainment and Communications
 
$
192.5

 
$
182.4

 
$
10.1

 
6%
 
$
382.8

 
$
370.5

 
$
12.3

 
3%





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
 
2016
 
2015
 
$
 
%
 
2016
 
2015
 
$
 
%
IT Services and Hardware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
$
23.1

 
$
23.5

 
$
(0.4
)
 
(2)%
 
$
45.4

 
$
44.1

 
$
1.3

 
3%
 
 
 
Management and Monitoring
 
7.9

 
7.6

 
0.3

 
4%
 
16.0

 
14.9

 
1.1

 
7%
 
 
 
Unified Communications
 
7.3

 
6.5

 
0.8

 
12%
 
14.8

 
13.2

 
1.6

 
12%
 
 
 
Cloud Services
 
10.8

 
7.0

 
3.8

 
54%
 
21.0

 
13.1

 
7.9

 
60%
 
 
 
 
 
49.1

 
44.6

 
4.5

 
10%
 
97.2

 
85.3

 
11.9

 
14%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
4.1

 
3.5

 
0.6

 
17%
 
8.0

 
7.0

 
1.0

 
14%
 
 
 
Unified Communications
 
2.8

 
2.6

 
0.2

 
8%
 
5.4

 
5.5

 
(0.1
)
 
(2)%
 
 
 
Telecom and IT hardware
 
53.8

 
55.6

 
(1.8
)
 
(3)%
 
101.7

 
116.1

 
(14.4
)
 
(12)%
 
 
 
 
 
60.7

 
61.7

 
(1.0
)
 
(2)%
 
115.1

 
128.6

 
(13.5
)
 
(10)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total IT Services and Hardware Revenue
 
$
109.8

 
$
106.3

 
$
3.5

 
3%
 
$
212.3

 
$
213.9

 
$
(1.6
)
 
(1)%






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
2016
 
2015
 
$
 
%
 
2016
 
2015
 
$
 
%
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
192.5

 
$
182.4

 
$
10.1

 
6%
 
$
382.8

 
$
370.5

 
$
12.3

 
3%
 
 
IT Services and Hardware
 
109.8

 
106.3

 
3.5

 
3%
 
212.3

 
213.9

 
(1.6
)
 
(1)%
 
 
Eliminations
 
(3.1
)
 
(2.9
)
 
(0.2
)
 
7%
 
(7.0
)
 
(5.7
)
 
(1.3
)
 
23%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
$
299.2

 
$
285.8

 
$
13.4

 
5%
 
$
588.1

 
$
578.7

 
$
9.4

 
2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Services and Products
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
88.3

 
$
80.1

 
$
8.2

 
10%
 
$
176.1

 
$
161.6

 
$
14.5

 
9%
 
 
IT Services and Hardware
 
85.5

 
83.5

 
2.0

 
2%
 
164.1

 
169.9

 
(5.8
)
 
(3)%
 
 
Eliminations
 
(3.0
)
 
(1.4
)
 
(1.6
)
 
n/m
 
(6.7
)
 
(3.1
)
 
(3.6
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total cost of services and products
 
$
170.8

 
$
162.2

 
$
8.6

 
5%
 
$
333.5

 
$
328.4

 
$
5.1

 
2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
35.4

 
$
39.8

 
$
(4.4
)
 
(11)%
 
$
70.0

 
$
74.8

 
$
(4.8
)
 
(6)%
 
 
IT Services and Hardware
 
14.2

 
13.3

 
0.9

 
7%
 
27.7

 
26.7

 
1.0

 
4%
 
 
Corporate and eliminations
 
6.6

 
3.9

 
2.7

 
69%
 
11.7

 
7.7

 
4.0

 
52%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total selling, general and administrative
 
$
56.2

 
$
57.0

 
$
(0.8
)
 
(1)%
 
$
109.4

 
$
109.2

 
$
0.2

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
41.6

 
$
31.0

 
$
10.6

 
34%
 
$
81.8

 
$
60.5

 
$
21.3

 
35%
 
 
IT Services and Hardware
 
3.2

 
3.0

 
0.2

 
7%
 
6.4

 
6.1

 
0.3

 
5%
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
 
 
 
 
Total depreciation and amortization
 
$
44.8

 
$
34.0

 
$
10.8

 
32%
 
$
88.2

 
$
66.6

 
$
21.6

 
32%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
—

 
$
1.4

 
$
(1.4
)
 
n/m
 
$
—

 
$
2.2

 
$
(2.2
)
 
n/m
 
 
IT Services and Hardware
 
—

 
0.3

 
(0.3
)
 
n/m
 
—

 
3.9

 
(3.9
)
 
n/m
 
 
Corporate
 
—

 
1.2

 
(1.2
)
 
n/m
 
—

 
1.6

 
(1.6
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other
 
$
—

 
$
2.9

 
$
(2.9
)
 
n/m
 
$
—

 
$
7.7

 
$
(7.7
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
27.2

 
$
30.1

 
$
(2.9
)
 
(10)%
 
$
54.9

 
$
71.4

 
$
(16.5
)
 
(23)%
 
 
IT Services and Hardware
 
6.9

 
6.2

 
0.7

 
11%
 
14.1

 
7.3

 
6.8

 
93%
 
 
Corporate
 
(6.7
)
 
(6.6
)
 
(0.1
)
 
2%
 
(12.0
)
 
(11.9
)
 
(0.1
)
 
1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating income
 
$
27.4

 
$
29.7

 
$
(2.3
)
 
(8)%
 
$
57.0

 
$
66.8

 
$
(9.8
)
 
(15)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Other includes restructuring charges, loss on sale or disposal of assets (net) and a curtailment loss.




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Segment Metric Information
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
 
2016
 
2016
 
2015
 
2015
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
Residential voice lines
 
 
 
 
 
 
 
 
 
 
 
Legacy voice lines
131.7

 
138.7

 
146.4

 
153.5

 
161.5

 
 
Fioptics voice lines
77.4

 
74.4

 
71.4

 
68.0

 
64.2

 
 
Total residential voice lines
209.1

 
213.1

 
217.8

 
221.5

 
225.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Business voice lines
 
 
 
 
 
 
 
 
 
 
 
Legacy voice lines
203.2

 
208.9

 
215.4

 
220.1

 
227.5

 
 
VoIP lines*
112.7

 
107.0

 
89.5

 
86.9

 
82.4

 
 
Total business voice lines
315.9

 
315.9

 
304.9

 
307.0

 
309.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Total voice lines
525.0

 
529.0

 
522.7

 
528.5

 
535.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Long distance lines
329.3

 
334.0

 
339.7

 
344.6

 
349.7

 
 
 
 
 
 
 
 
 
 
 
 
Internet subscribers
 
 
 
 
 
 
 
 
 
 
 
DSL
121.7

 
127.9

 
133.7

 
137.7

 
142.7

 
 
Fioptics
175.0

 
164.5

 
153.7

 
143.6

 
132.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total internet subscribers
296.7

 
292.4

 
287.4

 
281.3

 
275.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Fioptics video subscribers
126.8

 
120.0

 
114.4

 
108.8

 
101.5

 
 
 
 
 
 
 
 
 
 
 
 
Fioptics units passed
478.7

 
453.7

 
432.0

 
408.1

 
382.3

 
 
 
 
 
 
 
 
 
 
 
 
 
* VoIP lines include Fioptics business voice lines.






Cincinnati Bell Inc.
 
 
 
 
Net Debt (Non-GAAP) and Common Shares Outstanding
 
 
 
(Unaudited)
 
 
 
 
(Dollars and shares in millions)
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
December 31,
 
 
 
2016
 
2015
 
 
 
 
 
 
 
Receivables Facility
$
33.0

 
$
17.6

 
Corporate Credit Agreement - Tranche B Term Loan
525.2

 
527.9

 
8 3/8% Senior Notes due 2020
397.1

 
478.5

 
7 1/4% Senior Notes due 2023
26.3

 
26.3

 
Cincinnati Bell Telephone Notes
93.9

 
128.7

 
Capital leases and other debt
73.2

 
68.3

 
Net unamortized discount
(1.7
)
 
(1.7
)
 
Unamortized note issuance costs
(6.6
)
 
(8.0
)
 
 
 
 
 
 
 
 
Total debt
1,140.4

 
1,237.6

 
 
 
 
 
 
 
Less: Cash and cash equivalents
(9.6
)
 
(7.4
)
 
 
 
 
 
 
 
 
Net debt (Non-GAAP: as defined by the company)
$
1,130.8

 
$
1,230.2

 
 
 
 
 
 
 
 
 
 
 
 
Corporate Credit Agreement availability
$
150.0

 
$
175.0

 
 
 
 
 
 
 
Common shares outstanding
209.1

 
209.9

 
 
 
 
 
 
 




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2016
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
 
 
 
 
 
 
$
77.6

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
44.4

 
 
Interest expense
 
 
 
 
 
 
 
19.9

 
 
Gain on sale of CyrusOne investment
 
 
 
 
 
 
 
(118.6
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
5.2

 
 
Other income, net
 
 
 
 
 
 
 
(1.1
)
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (GAAP)
 
$
27.2

 
$
6.9

 
$
(6.7
)
 
$
27.4

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
41.6

 
3.2

 
—

 
44.8

 
 
Pension and other retirement plan expenses
 
3.7

 
—

 
0.4

 
4.1

 
Adjusted EBITDA (Non-GAAP)
 
$
72.5

 
$
10.1

 
$
(6.3
)
 
$
76.3

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
38
%
 
9
%
 
—

 
26
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
 
 
 
 
 
 
$
191.6

 
Less:
 
 
 
 
 
 
 
 
 
 
Income from discontinued operations (net of tax)
 
 
 
 
 
 
 
10.9

 
Income from continuing operations (GAAP)
 
 
 
 
 
 
 
$
180.7

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
101.4

 
 
Interest expense
 
 
 
 
 
 
 
28.0

 
 
Gain on sale of CyrusOne investment
 
 
 
 
 
 
 
(295.2
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
13.5

 
 
Other expense, net
 
 
 
 
 
 
 
1.3

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (GAAP)
 
$
30.1

 
$
6.2

 
$
(6.6
)
 
$
29.7

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
31.0

 
3.0

 
—

 
34.0

 
 
Restructuring charges
 
0.8

 
0.3

 
1.2

 
2.3

 
 
Loss on sale or disposal of assets
 
0.3

 
—

 
—

 
0.3

 
 
Curtailment loss
 
0.3

 
—

 
—

 
0.3

 
 
Pension and other retirement plan expenses
 
7.8

 
—

 
0.6

 
8.4

 
Adjusted EBITDA (Non-GAAP)
 
$
70.3

 
$
9.5

 
$
(4.8
)
 
$
75.0

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
39
%
 
9
%
 
—

 
26
%
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
2.2

 
$
0.6

 
$
(1.5
)
 
$
1.3

 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
3
%
 
6
%
 
31
%
 
2
%




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
 
 
 
 
 
 
$
84.6

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
49.1

 
 
Interest expense
 
 
 
 
 
 
 
40.2

 
 
Gain on sale of CyrusOne investment
 
 
 
 
 
 
 
(118.6
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
2.8

 
 
Other income, net
 
 
 
 
 
 
 
(1.1
)
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (GAAP)
 
$
54.9

 
$
14.1

 
$
(12.0
)
 
$
57.0

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
81.8

 
6.4

 
—

 
88.2

 
 
Pension and other retirement plan expenses
 
7.4

 
—

 
0.9

 
8.3

 
Adjusted EBITDA (Non-GAAP)
 
$
144.1

 
$
20.5

 
$
(11.1
)
 
$
153.5

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
38
 %
 
10
%
 
—

 
26
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2015
 
 
 
 
Entertainment and Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
Net income (GAAP)
 
 
 
 
 
 
 
$
240.8

 
Less:
 
 
 
 
 
 
 
 
 
 
Income from discontinued operations (net of tax)
 
 
 
 
 
 
 
59.8

 
Income from continuing operations (GAAP)
 
 
 
 
 
 
 
$
181.0

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
102.0

 
 
Interest expense
 
 
 
 
 
 
 
60.7

 
 
Gain on sale of CyrusOne investment
 
 
 
 
 
 
 
(295.2
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
13.5

 
 
Other expense, net
 
 
 
 
 
 
 
4.8

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (GAAP)
 
$
71.4

 
$
7.3

 
$
(11.9
)
 
$
66.8

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
60.5

 
6.1

 
—

 
66.6

 
 
Restructuring charges
 
1.6

 
2.5

 
1.6

 
5.7

 
 
Loss on sale or disposal of assets
 
0.3

 
1.4

 
—

 
1.7

 
 
Curtailment loss
 
0.3

 
—

 
—

 
0.3

 
 
Pension and other retirement plan expenses
 
11.6

 
—

 
1.1

 
12.7

 
Adjusted EBITDA (Non-GAAP)
 
$
145.7

 
$
17.3

 
$
(9.2
)
 
$
153.8

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
39
 %
 
8
%
 
—

 
27
 %
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
(1.6
)
 
$
3.2

 
$
(1.9
)
 
$
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
(1
)%
 
18
%
 
21
%
 
0
 %




Cincinnati Bell Inc.
 
 
 
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
June 30,
 
June 30,
 
 
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
32.1

 
$
26.4

 
$
98.1

 
$
32.7

 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(59.2
)
 
(74.6
)
 
(121.6
)
 
(132.5
)
 
 
Dividends received from CyrusOne
2.8

 
9.0

 
4.9

 
15.0

 
 
Proceeds from sale of CyrusOne investment
142.5

 
426.0

 
142.5

 
426.0

 
 
Other, net
(0.6
)
 
—

 
(0.7
)
 
(0.1
)
 
 
 
 
 
 
 
 
 
 
 
Cash provided by investing activities
85.5

 
360.4

 
25.1

 
308.4

 
 
 
 
 
 
 
 
 
 
 
 
Net (decrease) increase in corporate credit and receivables facilities with initial maturities less than 90 days
(13.5
)
 
(24.1
)
 
15.4

 
(16.6
)
 
 
Repayment of debt
(93.7
)
 
(358.1
)
 
(124.6
)
 
(361.4
)
 
 
Debt issuance costs
(1.9
)
 
(0.4
)
 
(1.9
)
 
(0.4
)
 
 
Dividends paid on preferred stock
(2.6
)
 
(2.6
)
 
(5.2
)
 
(5.2
)
 
 
Common stock repurchase
(4.6
)
 
—

 
(4.6
)
 
—

 
 
Other, net
0.4

 
(0.2
)
 
(0.1
)
 
(0.6
)
 
 
 
 
 
 
 
 
 
 
 
Cash used in financing activities
(115.9
)
 
(385.4
)
 
(121.0
)
 
(384.2
)
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
1.7

 
1.4

 
2.2

 
(43.1
)
 
Cash and cash equivalents at beginning of period
7.9

 
13.4

 
7.4

 
57.9

 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at end of period
$
9.6

 
$
14.8

 
$
9.6

 
$
14.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP Cash Flow to
 
 
 
 
 
 
 
 
 
Free Cash Flow (Non-GAAP: as defined by the company)
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
$
1.7

 
$
1.4

 
$
2.2

 
$
(43.1
)
 
Adjustments:
 
 
 
 
 
 
 
 
 
Net decrease (increase) in corporate credit and receivables
facilities with initial maturities less than 90 days
13.5

 
24.1

 
(15.4
)
 
16.6

 
 
Repayment of debt
93.7

 
358.1

 
124.6

 
361.4

 
 
Discontinued operations
1.4

 
5.4

 
4.8

 
18.4

 
 
Decommissioning of wireless towers
0.2

 
1.5

 
1.9

 
1.5

 
 
Debt issuance costs
1.9

 
0.4

 
1.9

 
0.4

 
 
Common stock repurchase
4.6

 
—

 
4.6

 
—

 
 
Proceeds from sale of CyrusOne investment
(142.5
)
 
(426.0
)
 
(142.5
)
 
(426.0
)
 
 
 
 
 
 
 
 
 
 
 
 
   Free cash flow (Non-GAAP)
$
(25.5
)
 
$
(35.1
)
 
$
(17.9
)
 
$
(70.8
)
 
 
 
 
 
 
 
 
 
 
 
Income tax payments
$
0.8

 
$
0.9

 
$
1.4

 
$
0.9

 
 
 
 
 
 
 
 
 
 




Cincinnati Bell Inc.
 
Free Cash Flow (Non-GAAP: as defined by the company)
 
(Unaudited)
 
(Dollars in millions)
 
 
 
 
 
 
 
 
Free Cash Flow (Non-GAAP) for the three months ended June 30, 2015
$
(35.1
)
 
 
 
 
Increase in Adjusted EBITDA (Non-GAAP)
1.3

 
Decrease in capital expenditures
15.4

 
Decrease in interest payments
10.3

 
Decrease in pension and postretirement payments and contributions
8.0

 
Change in working capital and other
(25.4
)
 
 
 
 
Free Cash Flow (Non-GAAP) for the three months ended June 30, 2016
$
(25.5
)
 
 
 
 
Free Cash Flow (Non-GAAP) for the six months ended June 30, 2015
$
(70.8
)
 
 
 
 
Decrease in Adjusted EBITDA (Non-GAAP)
(0.3
)
 
Decrease in capital expenditures
10.9

 
Decrease in interest payments
23.5

 
Decrease in pension and postretirement payments and contributions
10.1

 
Change in working capital and other
8.7

 
 
 
 
Free Cash Flow (Non-GAAP) for the six months ended June 30, 2016
$
(17.9
)
 
 
 




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Capital Expenditures
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Jun. 30, 2016
 
Mar. 31, 2016
 
Dec. 31, 2015
 
Sep. 30, 2015
 
Jun. 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
$
55.3

 
$
60.3

 
$
76.0

 
$
69.4

 
$
70.1

IT Services and Hardware
3.8

 
2.0

 
1.9

 
3.8

 
4.4

Corporate
0.1

 
0.1

 
—

 
—

 
0.1

Total capital expenditures
$
59.2

 
$
62.4

 
$
77.9

 
$
73.2

 
$
74.6





Cincinnati Bell Inc.
 
 
 
 
 
Normalized Statements of Operations (Non-GAAP) - Reconciliation to Reported Results
 
 
(Unaudited)
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three
 
 
 
 
Three
 
 
 
Months Ended
 
 
 
 
Months Ended
 
 
 
June 30, 2016
 
 
 
 
June 30, 2016
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
299.2

 
$
—

 
$
299.2

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
170.8

 
—

 
170.8

 
 
Selling, general and administrative
56.2

 
—


56.2

 
 
Depreciation and amortization
44.8

 
—

 
44.8

 
 
 
Operating income
27.4

 
—

 
27.4

 
 
 
 
 
 
 
 
 
 
Interest expense
19.9

 
—

 
19.9

 
Loss on extinguishment of debt
5.2

 
(5.2
)
[A]
—

 
Gain on sale of CyrusOne investment
(118.6
)
 
118.6

[B]
—

 
Other income, net
(1.1
)
 
1.1

[C]
—

 
 
 
 
 
 
 
 
 
 
Income before income taxes
122.0

 
(114.5
)
 
7.5

 
Income tax expense
44.4

 
(41.2
)
 
3.2

 
 
 
 
 
 
 
 
 
 
Net income
77.6

 
(73.3
)
 
4.3

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
2.6

 
—

 
2.6

 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
$
75.0

 
$
(73.3
)
 
$
1.7

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
210.4

 
210.4

 
210.4

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share*
$
0.36

 
$
(0.35
)
 
$
0.01

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Loss on extinguishment of debt due to the redemption of $81.4 million of the outstanding 8 3/8% Senior Notes due 2020 and amending the Corporate Credit Agreement, partially offset by a gain on the redemption of $5.0 million of the outstanding CBT Notes due 2028.
 
 
 
 
 
 
 
 
 
B
Gain on the sale of CyrusOne investment.
 
 
C
Adjust asset retirement obligation to lower expected costs associated with wireless tower decommissioning.
 
 
*
Diluted earnings per common share has been calculated independently for the results above. Therefore, the sum of the per share amounts will not necessarily equal the per share results for the Before Special Items (Non-GAAP) results.




Cincinnati Bell Inc.
 
 
 
 
 
Normalized Statements of Operations (Non-GAAP) - Reconciliation to Reported Results
 
 
(Unaudited)
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
Three
 
 
 
 
Three
 
 
 
Months Ended
 
 
 
 
Months Ended
 
 
 
June 30, 2015
 
 
 
 
June 30, 2015
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
285.8

 
$
—

 
$
285.8

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
162.2

 
—

 
162.2

 
 
Selling, general and administrative
57.0

 
(3.8
)
[A]
53.2

 
 
Depreciation and amortization
34.0

 
—

 
34.0

 
 
Restructuring charges
2.3

 
(2.3
)
[B]
—

 
 
Gain on sale or disposal of assets, net
0.3

 
(0.3
)
[C]
—

 
 
Curtailment loss
0.3

 
(0.3
)
[D]
—

 
 
 
Operating income
29.7

 
6.7

 
36.4

 
 
 
 
 
 
 
 
 
 
Interest expense
28.0

 
—

 
28.0

 
Loss on extinguishment of debt
13.5

 
(13.5
)
[E]
—

 
Gain on sale of CyrusOne investment
(295.2
)
 
295.2

[F]
—

 
Other expense, net
1.3

 
—

 
1.3

 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
282.1

 
(275.0
)
 
7.1

 
Income tax expense
101.4

 
(99.0
)
 
2.4

 
Income from continuing operations
180.7

 
(176.0
)
 
4.7

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations (net of tax)
10.9

 
(10.9
)
 
—

 
 
 
 
 
 
 
 
 
 
Net income
191.6

 
(186.9
)
 
4.7

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
2.6

 
—

 
2.6

 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
$
189.0

 
$
(186.9
)
 
$
2.1

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
214.6

 
210.1

[G]
210.1

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share*
$
0.89

 
$
(0.89
)
 
$
0.01

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Pension related charges associated with non-qualified excess plan.
 
 
 
 
 
 
 
 
 
B
Restructuring charges consist of employee severance and project costs to identify opportunities to further integrate the business markets within our Entertainment and Communications segment and IT Services and Hardware segment.
 
 
C
Loss is attributable to a software project that was abandoned in the second quarter.
 
 
 
 
 
 
 
 
 
D
Curtailment loss resulted from an amendment to the bargained pension plan.
 
 
 
 
 
 
 
 
 
E
Loss on extinguishment of debt related to the redemption of $300.0 million of the outstanding 8 3/4% Senior Subordinated Notes due 2018 and the redemption of $45.1 million of the outstanding 8 3/8% Senior Notes due 2020.
 
 
 
 
 
 
 
 
 
F
Gain on sale of CyrusOne investment.
 
 
 
 
 
 
 
 
 
G
Excludes effect of convertible preferred shares.
 
 
 
 
 
 
 
 
 
*
Diluted earnings per common share has been calculated independently for the results above. Therefore, the sum of the per share amounts will not necessarily equal the per share results for the Before Special Items (Non-GAAP) results.




Cincinnati Bell Inc.
 
 
 
 
 
Normalized Statements of Operations (Non-GAAP) - Reconciliation to Reported Results
 
 
(Unaudited)
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six
 
 
 
 
Six
 
 
 
Months Ended
 
 
 
 
Months Ended
 
 
 
June 30, 2016
 
 
 
 
June 30, 2016
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
588.1

 
$
—

 
$
588.1

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
333.5

 
—

 
333.5

 
 
Selling, general and administrative
109.4

 
—

 
109.4

 
 
Depreciation and amortization
88.2

 
—

 
88.2

 
 
 
Operating income
57.0

 
—

 
57.0

 
 
 
 
 
 
 
 
 
 
Interest expense
40.2

 
—

 
40.2

 
Loss on extinguishment of debt
2.8

 
(2.8
)
[A]
—

 
Gain on sale of CyrusOne investment
(118.6
)
 
118.6

[B]
—

 
Other income, net
(1.1
)
 
1.1

[C]
—

 
 
 
 
 
 
 
 
 
 
Income before income taxes
133.7

 
(116.9
)
 
16.8

 
Income tax expense
49.1

 
(42.1
)
 
7.0

 
 
 
 
 
 
 
 
 
 
Net income
84.6

 
(74.8
)
 
9.8

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
5.2

 
—

 
5.2

 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
$
79.4

 
$
(74.8
)
 
$
4.6

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
210.4

 
210.4

 
210.4

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share*
$
0.38

 
$
(0.36
)
 
$
0.02

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Loss on extinguishment of debt due to the redemption of $81.4 million of the outstanding 8 3/8% Senior Notes due 2020 and amending the Corporate Credit Agreement, partially offset by a gain on the redemption of $34.8 million of the outstanding CBT Notes due 2028.
 
 
 
 
 
 
 
 
 
B
Gain on the sale of CyrusOne investment.
 
 
 
 
 
 
 
 
 
C
Adjust asset retirement obligation to lower expected costs associated with wireless tower decommissioning.
 
 
 
 
 
 
 
 
 
*
Diluted earnings per common share have been calculated independently for the results above. Therefore, the sum of the per share amounts will not necessarily equal the per share results for the Before Special Items (Non-GAAP) results.




Cincinnati Bell Inc.
 
 
 
 
 
Normalized Statements of Operations (Non-GAAP) - Reconciliation to Reported Results
 
 
(Unaudited)
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six
 
 
 
 
Six
 
 
 
Months Ended
 
 
 
 
Months Ended
 
 
 
June 30, 2015
 
 
 
 
June 30, 2015
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
578.7

 
$
—

 
$
578.7

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
328.4

 
—

 
328.4

 
 
Selling, general and administrative
109.2

 
(3.8
)
[A]
105.4

 
 
Depreciation and amortization
66.6

 
—

 
66.6

 
 
Restructuring charges
5.7

 
(5.7
)
[B]
—

 
 
Loss on sale or disposal of assets, net
1.7

 
(1.7
)
[C]
—

 
 
Curtailment loss
0.3

 
(0.3
)
[D]
—

 
 
 
Operating income
66.8

 
11.5

 
78.3

 
 
 
 
 
 
 
 
 
 
Interest expense
60.7

 
—

 
60.7

 
Loss on extinguishment of debt
13.5

 
(13.5
)
[E]
—

 
Gain on sale of CyrusOne investment
(295.2
)
 
295.2

[F]
—

 
Other expense, net
4.8

 
—

 
4.8

 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
283.0

 
(270.2
)
 
12.8

 
Income tax expense
102.0

 
(97.3
)
 
4.7

 
Income from continuing operations
181.0

 
(172.9
)
 
8.1

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations (net of tax)
59.8

 
(59.8
)
 
—

 
 
 
 
 
 
 
 
 
 
Net income
240.8

 
(232.7
)
 
8.1

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
5.2

 
—

 
5.2

 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
$
235.6

 
$
(232.7
)
 
$
2.9

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
210.1

 
210.1


210.1

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share*
$
1.12

 
$
(1.11
)
 
$
0.01

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Pension related charges associated with non-qualified excess plan.
 
 
 
 
 
 
 
 
 
B
Restructuring charges consist of employee severance and project costs to identify opportunities to further integrate the business markets within our Entertainment and Communications segment and IT Services and Hardware segment.
 
 
C
Loss is attributable to a software project that was abandoned in the second quarter and discontinuing our cyber-security product offering in the first quarter.
 
 
 
 
 
 
 
 
 
D
Curtailment loss resulted from an amendment to the bargained pension plan.
 
 
 
 
 
 
 
 
 
E
Loss on extinguishment of debt related to the redemption of $300.0 million of the outstanding 8 3/4% Senior Subordinated Notes due 2018 and the redemption of $45.1 million of the outstanding 8 3/8% Senior Notes due 2020.
 
 
 
 
 
 
 
 
 
F
Gain on sale of CyrusOne investment.
 
 
 
 
 
 
 
 
 
*
Diluted earnings per common share have been calculated independently for the results above. Therefore, the sum of the per share amounts will not necessarily equal the per share results for the Before Special Items (Non-GAAP) results.




Cincinnati Bell Inc.
 
 
 
 
 
Reconciliation of Operating Income (GAAP) Guidance to Adjusted EBITDA (Non-GAAP) Guidance
 
(Unaudited)
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  2016 Operating Income (GAAP) Guidance
 
$
105

 
 
 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Depreciation and amortization
 
180

 
 
   Pension and other retirement plan expenses
 
15

 
 
   Other
 
3

 
 
 
 
 
 
 
 
 
 
2016 Adjusted EBITDA (Non-GAAP) Guidance
 
$
303

*
 
 
 
 
 
 
* Plus or minus 2 percent
 
 
 
 
 
 



CONTACT:
    
Cincinnati Bell Inc.
Investor contact:
Josh Duckworth, 513-397-2292

Media contact:
Jane Weiler, 513-397-9941



Cincinnati Bell Second Quarter 2016 Results August 4, 2016

 
Today's Agenda Highlights, Segment Results and Financial Overview Ted Torbeck, President & Chief Executive Officer Question & Answer 2

 
Safe Harbor This presentation and the documents incorporated by reference herein contain forward-looking statements regarding future events and our future results that are subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents we file with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including Cincinnati Bell’s Form 10-K report, Form 10-Q reports and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason. 3

 
Non-GAAP Financial Measures This presentation contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt and free cash flow. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of Adjusted EBITDA, net debt and free cash flow (including the Company’s definition of these terms) to comparable GAAP financial measures can be found in the earnings release on our website at www.cincinnatibell.com within the Investor Relations section. 4

 
Ted Torbeck President & Chief Executive Officer 5

 
Highlights and Financial Overview $182 $70 $106 $10 $(5)$(2) $192 $72 $110 $10 $(6)$(3) 6 Entertainment & Communications IT Services & Hardware Eliminations Corporate Revenue RevenueAdjusted EBITDA (Non-GAAP) Adjusted EBITDA (Non-GAAP) $286 $299 $75 $76 Q2 2015 Q2 2016 ▪ Consolidated Revenue for the quarter totaled $299 million, increasing $13 million compared to prior year Revenue from strategic products totaled $158 million, up 21% compared to the prior year ▪ Operating income totaled $27 million, compared to $30 million a year ago ▪ Strong Second quarter Adjusted EBITDA of $76 million, up 2% year-over-year ▪ Net income totaled $78 million during the second quarter, resulting in diluted EPS of $0.36 Second Quarter 2016 Highlights ($ in millions) __

 
Revenue Adj. EBITDA (Non-GAAP) Adj. EBITDA Margin (Non-GAAP) Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 $182 $185 $188 $190 $192 $70 $68 $69 $72 $72 39% 37% 37% 38% 38% Entertainment & Communications Revenue and Adjusted EBITDA 7 ▪ Strategic revenues for the quarter totaled $111 million, up 26% year-over-year ▪ Operating income totaled $27 million in the quarter, compared to $30 million in the prior year ▪ Adjusted EBITDA totaled $72 million in the second quarter, resulting in Adjusted EBITDA margins of 38% ▪ Total internet subscribers of 296,700 at the end of the second quarter, up 21,600 subs compared to a year ago ▪ Voice line loss was 2% – improved from 5% in the prior year Business lines increased 2% Residential line decreased 7% __ __ ($ in millions)

 
Legacy IntegrationStrategic [1] 8 Q2 2015 Q2 2016 $42 $49 $56 $48 Entertainment & Communications Business & Consumer Markets $99 $97 Business & Carrier Market Revenue Entertainment & Communications Business Integration revenue totaled $1 million in Q2 2015 Entertainment & Communications Consumer Integration revenue totaled $1 million in Q2 2015 and Q2 2016 [1] Consumer Market Revenue Q2 2015 Q2 2016 $46 $62 $36 $32 $83 $95 ▪ Fioptics revenue growth continues to more than offset legacy declines ▪ Business revenue totaled $71 million, consistent with the prior year ▪ Carrier revenue was $26 million, down $2 million from 2015 due to lower switched access revenue and one-time projects completed in the prior year ($ in millions) Y/Y (14)% 16% Y/Y (11)% 36%

 
9 Q2 2015 Q2 2016 $23 $31 $16 $24$6 $7 $45 $62 Fioptics Update Fioptics Revenue Total Fioptics Subscribers Video Internet Voice ▪ Fioptics monthly ARPU for the quarter was up approximately 6% from 2015. Q2 2016 ARPUs are as follows: Video – $83, Internet – $47, Voice – $28 __ __ __ ($ in millions) Y/Y 17% 49% 35% Q2 2015 Q2 2016 102 127132 175 69 87 ▪ Fioptics is available to 479 thousand addresses, or 60% of Greater Cincinnati Passed 25 thousand new addresses in Q2 2016 ▪ Fioptics Penetration: Video – 27%, Internet – 37%, Voice – 18% ▪ Total video churn was 2.5% for the quarter Single-family churn was 2.1% Apartment churn was 4.9%

 
Strategic Revenue Integration Revenue Adj. EBITDA (Non-GAAP) Adj. EBITDA Margin (Non-GAAP) Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 $45 $46 $48 $48 $49 $61 $71 $56 $55 $61 $10 $10 $9 $10 $10 9% 9% 9% 10% 9% IT Services & Hardware Revenue and Adjusted EBITDA 10 ▪ Revenue of $110 million for Q2 2016, up 3% from Q2 2015 Strategic Revenues totaled $49 million in Q2 2016, up 10% compared to the prior year Telecom & IT hardware revenue of $54 million for Q2 2016 was down from the prior year due to the cyclical nature of these sales ▪ Operating income and Adjusted EBITDA for the quarter totaled $7 million and $10 million, respectively ▪ Adjusted EBITDA margin was 9%, consistent from a year ago $106 $117 $104 $103 $110 __ __ ($ in millions)

 
Q2 2016 Cash Flow and Capital Expenditures Free Cash Flow (Non-GAAP) Capital Expenditures Q2 2016 YTD 2016 Adjusted EBITDA (Non-GAAP) $ 76 $ 153 Interest Payments (34) (42) Capital Expenditures (60) (122) Pension and OPEB Payments (2) (5) Dividends from CyrusOne 3 5 Working Capital and Other (9) (7) Free Cash Flow (Non-GAAP) $ (26) $ (18) Selected 2016 Free Cash Flow Items ▪ CyrusOne dividends ~ $8 million ▪ Capital expenditures: $265 - $275 million ▪ Interest payments ~ $75 million ▪ Pension and OPEB payments ~ $12 million Q2 2016 YTD 2016 Construction $ 20 $ 37 Installation 8 21 Value Added 4 11 Total Fioptics $ 32 $ 69 Other Strategic 15 32 Discretionary Investments 47 101 Maintenance 13 21 $ 60 $ 122 11 ($ in millions) Cash Flow Q2 2016 YTD 2016 Operating Activities $ 32 $ 98 Investing Activities 86 25 Financing Activities (116) (121) Change in Cash 2 2

 
2016 Guidance 2016 Guidance Revenue $ 1.2 billion Adjusted EBITDA $303 million* * Plus or minus 2 percent 12

 
Appendix 13

 
Consolidated Results ($ in millions, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Revenue $ 299.2 $ 285.8 $ 588.1 $ 578.7 Costs and expenses Cost of services and products 170.8 162.2 333.5 328.4 Selling, general and administrative 56.2 57.0 109.4 109.2 Depreciation and amortization 44.8 34.0 88.2 66.6 Other — 2.9 — 7.7 Operating Income 27.4 29.7 57.0 66.8 Interest expense 19.9 28.0 40.2 60.7 Gain on extinguishment of debt 5.2 13.5 2.8 13.5 Gain on sale of CyrusOne investment (118.6) (295.2) (118.6) (295.2) Other (income) expense, net (1.1) 1.3 (1.1) 4.8 Income from continuing operations before income taxes 122.0 282.1 133.7 283.0 Income tax expense 44.4 101.4 49.1 102.0 Income from continuing operations 77.6 180.7 84.6 181.0 Income from discontinued operations, net of tax — 10.9 — 59.8 Net income 77.6 191.6 84.6 240.8 Preferred stock dividends 2.6 2.6 5.2 5.2 Net income applicable to common shareholders $ 75.0 $ 189.0 $ 79.4 $ 235.6 Basic and diluted net earnings per common share Earnings from continuing operations $ 0.36 $ 0.85 $ 0.38 $ 0.84 Earnings from discontinued operations — 0.05 — 0.29 Basic and diluted net earnings per common share $ 0.36 $ 0.90 $ 0.38 $ 1.13 . 14

 
Revenue Classifications - Entertainment and Communications Strategic Legacy Integration Data Voice Video Services and Other Fioptics Internet DSL (1) (> 10 meg) Ethernet Private Line MPLS (2) SONET (3) Dedicated Internet Access Wavelength Audio Conferencing Fioptics Voice VoIP (4) Fioptics Video Wiring Projects DSL (< 10 meg) DS0 (5), DS1, DS3 TDM (6) Traditional Voice Long Distance Switched Access Digital Trunking Advertising Directory Assistance Maintenance Information Services Wireless Handsets and Accessories 15 (1) Digital Subscriber Line (2) Multi-Protocol Label Switching (3) Synchronous Optical Network (4) Voice of Internet Protocol (5) Digital Signal (6) Time Division Multiplexing

 
Revenue Classifications - IT Services and Hardware Professional Services Unified Communications Cloud Services Monitoring and Management Telecom & IT Hardware Strategic Integration Consulting Staff Augmentation Voice Monitoring Managed IP Telephony Solutions Virtual Data Centers Storage Backup Network Monitoring/Management Security Installation Maintenance Hardware Software Licenses 16

 
Revenue – MD&A Strategic, Legacy and Integration ($ in millions) Q2 2016 Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data $ 60.8 $ — Voice 17.9 — Video 30.9 — Services and other 1.4 — Professional services — 23.1 Management and monitoring — 7.9 Unified communications — 7.3 Cloud services — 10.8 Total Strategic 111.0 49.1 160.1 (2.4) 157.7 Legacy Data $ 26.0 $ — Voice 51.2 — Services and other 2.8 — Total Legacy 80.0 — 80.0 (0.1) 79.9 Integration Services and other $ 1.5 $ — Professional services — 4.1 Unified communications — 2.8 Telecom and IT hardware — 53.8 Total Integration 1.5 60.7 62.2 (0.6) 61.6 $ 192.5 $ 109.8 $ 302.3 $ (3.1) $ 299.2 Eliminations 0.2 2.9 3.1 Total Revenue $ 192.3 $ 106.9 $ 299.2 17

 
Revenue – MD&A Strategic, Legacy and Integration ($ in millions) Q2 2015 Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data $ 47.9 $ — Voice 15.5 — Video 22.9 — Services and other 1.5 — Professional services — 23.5 Management and monitoring — 7.6 Unified communications — 6.5 Cloud services — 7.0 Total Strategic 87.8 44.6 132.4 (2.2) 130.2 Legacy Data $ 30.9 $ — Voice 58.0 — Services and other 3.4 — Total Legacy 92.3 — 92.3 (0.1) 92.2 Integration Services and other $ 2.3 $ — Professional services — 3.5 Unified communications — 2.6 Telecom and IT hardware — 55.6 Total Integration 2.3 61.7 64.0 (0.6) 63.4 $ 182.4 $ 106.3 $ 288.7 $ (2.9) $ 285.8 Eliminations 0.4 2.5 2.9 Total Revenue $ 182.0 $ 103.8 $ 285.8 18

 
Revenue – MD&A Strategic, Legacy and Integration ($ in millions) YTD Q2 2016 Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data $ 118.9 $ — Voice 35.1 — Video 59.9 — Services and other 2.7 — Professional services — 45.4 Management and monitoring — 16.0 Unified communications — 14.8 Cloud services — 21.0 Total Strategic 216.6 97.2 313.8 (4.6) 309.2 Legacy Data $ 53.1 $ — Voice 104.2 — Services and other 5.9 — Total Legacy 163.2 — 163.2 (0.4) 162.8 Integration Services and other $ 3.0 $ — Professional services — 8.0 Unified communications — 5.4 Telecom and IT hardware — 101.7 Total Integration 3.0 115.1 118.1 (2.0) 116.1 $ 382.8 $ 212.3 $ 595.1 $ (7.0) $ 588.1 Eliminations 0.6 6.4 7.0 Total Revenue $ 382.2 $ 205.9 $ 588.1 19

 
Revenue – MD&A Strategic, Legacy and Integration ($ in millions) YTD Q2 2015 Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data $ 96.3 $ — Voice 30.2 — Video 44.3 — Services and other 3.2 — Professional services — 44.1 Management and monitoring — 14.9 Unified communications — 13.2 Cloud services — 13.1 Total Strategic 174.0 85.3 259.3 (4.3) 255.0 Legacy Data $ 63.7 $ — Voice 119.0 — Services and other 7.2 — Total Legacy 189.9 — 189.9 (0.3) 189.6 Integration Services and other $ 6.6 $ — Professional services — 7.0 Unified communications — 5.5 Telecom and IT hardware — 116.1 Total Integration 6.6 128.6 135.2 (1.1) 134.1 $ 370.5 $ 213.9 $ 584.4 $ (5.7) $ 578.7 Eliminations 0.7 5.0 5.7 Total Revenue $ 369.8 $ 208.9 $ 578.7 20

 

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings