Form 8-K CINCINNATI BELL INC For: Jul 30
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E-mailUNITED 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: July 30, 2015
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 July 30, 2015, Cincinnati Bell Inc. reported its financial results for the second quarter 2015. The earnings release is attached as Exhibit 99.1.
Section 7 - Regulation FD
Item 7.01 Regulation FD Disclosure
On July 30, 2015, 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 2015 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 July 30, 2015 | |||||
Exhibit 99.2 | Presentation made during the Cincinnati Bell second quarter 2015 earnings conference call on July 30, 2015 | |||||
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 July 30, 2015. 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: | July 30, 2015 | By: | /s/ Christopher J. Wilson | |
Christopher J. Wilson | ||||
Vice President, General Counsel and Secretary | ||||
EXHIBIT INDEX
Exhibit No. | Description | ||||
99.1 | Press release dated July 30, 2015 | ||||
99.2 | Presentation made during the Cincinnati Bell second quarter 2015 earnings conference call on July 30, 2015 | ||||
Cincinnati Bell Reports Second Quarter 2015 Results
HIGHLIGHTS
• | Strategic revenue from consumer and business products increased 20 percent year-over-year |
• | Fioptics revenue totaled $45 million, up 32 percent year-over-year |
• | Strong second quarter Adjusted EBITDA1 of $75 million |
• | Record high 102 thousand video subscribers and 275 thousand internet subscribers |
• | Sold 14 million CyrusOne partnership units for $426 million and announced the agreement to sell an additional 6 million partnership units for proceeds totaling $170 million |
CINCINNATI - July 30, 2015 - Cincinnati Bell Inc. (NYSE: CBB) today announced financial results for the second quarter of 2015, highlighted by strategic revenue totaling $130 million as demand for these products remains strong. Fioptics revenue for the quarter totaled $45 million, up 32 percent compared to the prior year and the Company now has more than 100 thousand video subscribers. Strategic managed and professional services revenue was $45 million in the quarter, up 32 percent compared to the prior year.
"Our investments continue to generate impressive strategic revenue growth for both consumer and business markets. The strong first-half performance has us well positioned to achieve the high-end of our 2015 financial guidance," said Ted Torbeck, president and chief executive officer. Torbeck also added, "We continue to opportunistically monetize our CyrusOne stake and have significantly improved the health of our balance sheet, expanding options available to further enhance the capital structure."
CONSOLIDATED RESULTS2
Consolidated revenue for the second quarter of 2015 was $286 million, up $3 million from the prior year. Operating income for the quarter totaled $30 million and Adjusted EBITDA equaled $75 million. Net income was $192 million, including income from discontinued operations. In the second quarter we recognized a $295 million gain on the sale of 14 million CyrusOne partnership units.
Entertainment and Communications Segment
• | Entertainment and Communications revenue for the quarter totaled $182 million, up $1 million compared to the prior year after excluding revenue from services provided to our wireless business which discontinued operations effective March 31, 2015. |
◦ | Fioptics revenue for the quarter was $45 million, up 32 percent from the prior year. |
◦ | Strategic revenue for business customers totaled $42 million (including $2 million of Fioptics revenue) for the quarter, up $2 million year-over-year after excluding revenue for services provided to our wireless operations in the prior year. |
• | Operating income and Adjusted EBITDA for the quarter totaled $30 million and $70 million, respectively. |
• | Adjusted EBITDA margin3 for the quarter was 39 percent. |
• | Fioptics video subscribers totaled 101,500 at the end of the second quarter, up 23 percent compared to the same period in 2014. |
• | Record high 275 thousand total internet subscribers at the end of the second quarter, up 5 thousand from a year ago. |
• | In the second quarter of 2015, we passed an additional 24,700 units with Fioptics which is now available to 382 thousand households within Greater Cincinnati. |
IT Services and Hardware Segment
• | Revenue of $106 million for the quarter was up 5 percent over the prior year. |
◦ | Strategic managed and professional services revenue was $45 million in the quarter, up 32 percent compared to the prior year. |
◦ | Hardware revenue was $60 million for the quarter, compared to $66 million in the second quarter of 2014. |
• | Operating income totaled $6 million for the quarter, up $3 million compared to a year ago. |
• | Adjusted EBITDA was $10 million for the quarter, up $4 million from the second quarter of 2014. |
Investment in CyrusOne
• | Completed the sale of 14 million partnership units for cash proceeds totaling $426 million. |
• | Announced agreement to sell 6 million partnership units in July for cash proceeds of $170 million. |
• | Remaining 11 percent ownership of CyrusOne valued at approximately $250 million. |
2015 Outlook
Cincinnati Bell reaffirms its financial guidance for 2015:
Category | 2015 Guidance |
Revenue | $1.1 billion |
Adjusted EBITDA | $297 million* |
*Plus or minus 2 percent
Conference Call/Webcast
Cincinnati Bell will host a conference call on July 30 at 10:00 a.m. (ET) to discuss its results for the second quarter of 2015. 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) 256-9124. Callers located outside of the U.S. and Canada may dial (913) 312-1443. 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 13, 2015. 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 3509850. 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 and 2014 report our former wireless segment results as discontinued operations. Effective March 31, 2015, the Company no longer provides wireless services.
3Adjusted 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 and unamortized premium and/or discount, 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. (NYSE: 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. Cincinnati Bell effectively owns approximately 11 percent of CyrusOne (NASDAQ: CONE), which is held in the form of CyrusOne common stock and CyrusOne LP partnership units. CyrusOne specializes in highly reliable enterprise-class, carrier-neutral data center properties and provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for its customers. 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 | ||||||||||||||||||||||||||||
2015 | 2014 | $ | % | 2015 | 2014 | $ | % | ||||||||||||||||||||||||
Revenue | $ | 285.8 | $ | 283.0 | $ | 2.8 | 1% | $ | 578.7 | $ | 565.2 | $ | 13.5 | 2% | |||||||||||||||||
Costs and expenses | |||||||||||||||||||||||||||||||
Cost of services and products | 162.2 | 154.1 | 8.1 | 5% | 328.4 | 304.8 | 23.6 | 8% | |||||||||||||||||||||||
Selling, general and administrative | 57.0 | 49.5 | 7.5 | 15% | 109.2 | 98.8 | 10.4 | 11% | |||||||||||||||||||||||
Depreciation and amortization | 34.0 | 31.0 | 3.0 | 10% | 66.6 | 62.1 | 4.5 | 7% | |||||||||||||||||||||||
Restructuring charges | 2.3 | 1.2 | 1.1 | 92% | 5.7 | 1.2 | 4.5 | n/m | |||||||||||||||||||||||
Loss (gain) on sale or disposal of assets, net | 0.3 | (0.1 | ) | 0.4 | n/m | 1.7 | (0.1 | ) | 1.8 | n/m | |||||||||||||||||||||
Curtailment loss | 0.3 | — | 0.3 | n/m | 0.3 | — | 0.3 | n/m | |||||||||||||||||||||||
Transaction costs | — | — | — | n/m | — | 0.7 | (0.7 | ) | n/m | ||||||||||||||||||||||
Operating income | 29.7 | 47.3 | (17.6 | ) | (37)% | 66.8 | 97.7 | (30.9 | ) | (32)% | |||||||||||||||||||||
Interest expense | 28.0 | 39.5 | (11.5 | ) | (29)% | 60.7 | 78.3 | (17.6 | ) | (22)% | |||||||||||||||||||||
Loss on extinguishment of debt | 13.5 | — | 13.5 | n/m | 13.5 | — | 13.5 | n/m | |||||||||||||||||||||||
Loss from CyrusOne equity method investment | 1.3 | 2.4 | (1.1 | ) | (46)% | 4.4 | 1.9 | 2.5 | n/m | ||||||||||||||||||||||
Gain on sale of CyrusOne equity method investment | (295.2 | ) | (192.8 | ) | (102.4 | ) | 53% | (295.2 | ) | (192.8 | ) | (102.4 | ) | 53% | |||||||||||||||||
Other expense (income), net | — | (0.9 | ) | 0.9 | n/m | 0.4 | (1.2 | ) | 1.6 | n/m | |||||||||||||||||||||
Income from continuing operations before income taxes | 282.1 | 199.1 | 83.0 | 42% | 283.0 | 211.5 | 71.5 | 34% | |||||||||||||||||||||||
Income tax expense | 101.4 | 75.4 | 26.0 | 34% | 102.0 | 81.9 | 20.1 | 25% | |||||||||||||||||||||||
Income from continuing operations | 180.7 | 123.7 | 57.0 | 46% | 181.0 | 129.6 | 51.4 | 40% | |||||||||||||||||||||||
Income (loss) from discontinued operations (net of tax) | 10.9 | (9.5 | ) | 20.4 | n/m | 59.8 | (8.4 | ) | 68.2 | n/m | |||||||||||||||||||||
Net income | 191.6 | 114.2 | 77.4 | 68% | 240.8 | 121.2 | 119.6 | 99% | |||||||||||||||||||||||
Preferred stock dividends | 2.6 | 2.6 | — | 0% | 5.2 | 5.2 | — | 0% | |||||||||||||||||||||||
Net income applicable to common shareowners | $ | 189.0 | $ | 111.6 | $ | 77.4 | 69% | $ | 235.6 | $ | 116.0 | $ | 119.6 | n/m | |||||||||||||||||
Basic net earnings per common share | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 0.85 | $ | 0.58 | $ | 0.84 | $ | 0.60 | |||||||||||||||||||||||
Earnings (loss) from discontinued operations | 0.05 | (0.04 | ) | 0.29 | (0.04 | ) | |||||||||||||||||||||||||
Basic net earnings per common share | $ | 0.90 | $ | 0.54 | $ | 1.13 | $ | 0.56 | |||||||||||||||||||||||
Diluted net earnings per common share | |||||||||||||||||||||||||||||||
Earnings from continuing operations | $ | 0.84 | $ | 0.58 | $ | 0.84 | $ | 0.59 | |||||||||||||||||||||||
Earnings (loss) from discontinued operations | 0.05 | (0.05 | ) | 0.28 | (0.04 | ) | |||||||||||||||||||||||||
Diluted net earnings per common share | $ | 0.89 | $ | 0.53 | $ | 1.12 | $ | 0.55 | |||||||||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||
- Basic | 209.7 | 208.5 | 209.4 | 208.2 | |||||||||||||||||||||||||||
- Diluted | 214.6 | 209.4 | 210.1 | 209.2 | |||||||||||||||||||||||||||
Cincinnati Bell Inc. | ||||||||||||||||||||||||||||||
Income Statements by Segment | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
June 30, | Change | June 30, | Change | |||||||||||||||||||||||||||
2015 | 2014 | $ | % | 2015 | 2014 | $ | % | |||||||||||||||||||||||
Entertainment and Communications | ||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||
Data | $ | 84.6 | $ | 84.2 | $ | 0.4 | 0% | $ | 171.9 | $ | 167.2 | $ | 4.7 | 3% | ||||||||||||||||
Voice - local service | 44.7 | 51.9 | (7.2 | ) | (14)% | 92.1 | 105.0 | (12.9 | ) | (12)% | ||||||||||||||||||||
Long distance and VoIP | 27.5 | 26.8 | 0.7 | 3% | 54.7 | 53.7 | 1.0 | 2% | ||||||||||||||||||||||
Entertainment | 23.0 | 18.4 | 4.6 | 25% | 44.5 | 35.4 | 9.1 | 26% | ||||||||||||||||||||||
Other | 2.6 | 3.4 | (0.8 | ) | (24)% | 7.3 | 7.0 | 0.3 | 4% | |||||||||||||||||||||
Total revenue | 182.4 | 184.7 | (2.3 | ) | (1)% | 370.5 | 368.3 | 2.2 | 1% | |||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||
Cost of services and products | 80.1 | 73.0 | 7.1 | 10% | 161.6 | 144.6 | 17.0 | 12% | ||||||||||||||||||||||
Selling, general and administrative | 39.8 | 32.9 | 6.9 | 21% | 74.8 | 65.1 | 9.7 | 15% | ||||||||||||||||||||||
Depreciation and amortization | 31.0 | 28.2 | 2.8 | 10% | 60.5 | 56.3 | 4.2 | 7% | ||||||||||||||||||||||
Other* | 1.4 | 1.0 | 0.4 | 40% | 2.2 | 0.9 | 1.3 | n/m | ||||||||||||||||||||||
Total operating costs and expenses | 152.3 | 135.1 | 17.2 | 13% | 299.1 | 266.9 | 32.2 | 12% | ||||||||||||||||||||||
Operating income | $ | 30.1 | $ | 49.6 | $ | (19.5 | ) | (39)% | $ | 71.4 | $ | 101.4 | $ | (30.0 | ) | (30)% | ||||||||||||||
IT Services and Hardware | ||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||
Telecom and IT equipment distribution | $ | 60.4 | $ | 65.9 | $ | (5.5 | ) | (8)% | $ | 125.7 | $ | 133.8 | $ | (8.1 | ) | (6)% | ||||||||||||||
Managed and professional services | 45.9 | 35.7 | 10.2 | 29% | 88.2 | 69.7 | 18.5 | 27% | ||||||||||||||||||||||
Total revenue | 106.3 | 101.6 | 4.7 | 5% | 213.9 | 203.5 | 10.4 | 5% | ||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||
Cost of services and products | 83.5 | 83.6 | (0.1 | ) | 0% | 169.9 | 165.3 | 4.6 | 3% | |||||||||||||||||||||
Selling, general and administrative | 13.3 | 12.4 | 0.9 | 7% | 26.7 | 24.4 | 2.3 | 9% | ||||||||||||||||||||||
Depreciation and amortization | 3.0 | 2.8 | 0.2 | 7% | 6.1 | 5.6 | 0.5 | 9% | ||||||||||||||||||||||
Other* | 0.3 | — | 0.3 | n/m | 3.9 | — | 3.9 | n/m | ||||||||||||||||||||||
Total operating costs and expenses | 100.1 | 98.8 | 1.3 | 1% | 206.6 | 195.3 | 11.3 | 6% | ||||||||||||||||||||||
Operating income | $ | 6.2 | $ | 2.8 | $ | 3.4 | n/m | $ | 7.3 | $ | 8.2 | $ | (0.9 | ) | (11)% | |||||||||||||||
*Other includes restructuring charges, loss (gain) on sale or disposal of assets, net and a curtailment loss. | ||||||||||||||||||||||||||||||
Cincinnati Bell Inc. | ||||||||||||||||||||||||||||||
Segment Information | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||
June 30, | Change | June 30, | Change | |||||||||||||||||||||||||||
2015 | 2014 | $ | % | 2015 | 2014 | $ | % | |||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||
Entertainment and Communications | $ | 182.4 | $ | 184.7 | $ | (2.3 | ) | (1)% | $ | 370.5 | $ | 368.3 | $ | 2.2 | 1% | |||||||||||||||
IT Services and Hardware | 106.3 | 101.6 | 4.7 | 5% | 213.9 | 203.5 | 10.4 | 5% | ||||||||||||||||||||||
Eliminations | (2.9 | ) | (3.3 | ) | 0.4 | (12)% | (5.7 | ) | (6.6 | ) | 0.9 | (14)% | ||||||||||||||||||
Total revenue | $ | 285.8 | $ | 283.0 | $ | 2.8 | 1% | $ | 578.7 | $ | 565.2 | $ | 13.5 | 2% | ||||||||||||||||
Cost of Services and Products | ||||||||||||||||||||||||||||||
Entertainment and Communications | $ | 80.1 | $ | 73.0 | $ | 7.1 | 10% | $ | 161.6 | $ | 144.6 | $ | 17.0 | 12% | ||||||||||||||||
IT Services and Hardware | 83.5 | 83.6 | (0.1 | ) | 0% | 169.9 | 165.3 | 4.6 | 3% | |||||||||||||||||||||
Eliminations | (1.4 | ) | (2.5 | ) | 1.1 | (44)% | (3.1 | ) | (5.1 | ) | 2.0 | (39)% | ||||||||||||||||||
Total cost of services and products | $ | 162.2 | $ | 154.1 | $ | 8.1 | 5% | $ | 328.4 | $ | 304.8 | $ | 23.6 | 8% | ||||||||||||||||
Selling, General and Administrative | ||||||||||||||||||||||||||||||
Entertainment and Communications | $ | 39.8 | $ | 32.9 | $ | 6.9 | 21% | $ | 74.8 | $ | 65.1 | $ | 9.7 | 15% | ||||||||||||||||
IT Services and Hardware | 13.3 | 12.4 | 0.9 | 7% | 26.7 | 24.4 | 2.3 | 9% | ||||||||||||||||||||||
Corporate and eliminations | 3.9 | 4.2 | (0.3 | ) | (7)% | 7.7 | 9.3 | (1.6 | ) | (17)% | ||||||||||||||||||||
Total selling, general and administrative | $ | 57.0 | $ | 49.5 | $ | 7.5 | 15% | $ | 109.2 | $ | 98.8 | $ | 10.4 | 11% | ||||||||||||||||
Depreciation and Amortization | ||||||||||||||||||||||||||||||
Entertainment and Communications | $ | 31.0 | $ | 28.2 | $ | 2.8 | 10% | $ | 60.5 | $ | 56.3 | $ | 4.2 | 7% | ||||||||||||||||
IT Services and Hardware | 3.0 | 2.8 | 0.2 | 7% | 6.1 | 5.6 | 0.5 | 9% | ||||||||||||||||||||||
Corporate | — | — | — | n/m | — | 0.2 | (0.2 | ) | n/m | |||||||||||||||||||||
Total depreciation and amortization | $ | 34.0 | $ | 31.0 | $ | 3.0 | 10% | $ | 66.6 | $ | 62.1 | $ | 4.5 | 7% | ||||||||||||||||
Other* | ||||||||||||||||||||||||||||||
Entertainment and Communications | $ | 1.4 | $ | 1.0 | $ | 0.4 | 40% | $ | 2.2 | $ | 0.9 | $ | 1.3 | n/m | ||||||||||||||||
IT Services and Hardware | 0.3 | — | 0.3 | n/m | 3.9 | — | 3.9 | n/m | ||||||||||||||||||||||
Corporate | 1.2 | 0.1 | 1.1 | n/m | 1.6 | 0.9 | 0.7 | 78% | ||||||||||||||||||||||
Total other | $ | 2.9 | $ | 1.1 | $ | 1.8 | n/m | $ | 7.7 | $ | 1.8 | $ | 5.9 | n/m | ||||||||||||||||
Operating Income | ||||||||||||||||||||||||||||||
Entertainment and Communications | $ | 30.1 | $ | 49.6 | $ | (19.5 | ) | (39)% | $ | 71.4 | $ | 101.4 | $ | (30.0 | ) | (30)% | ||||||||||||||
IT Services and Hardware | 6.2 | 2.8 | 3.4 | n/m | 7.3 | 8.2 | (0.9 | ) | (11)% | |||||||||||||||||||||
Corporate | (6.6 | ) | (5.1 | ) | (1.5 | ) | 29% | (11.9 | ) | (11.9 | ) | — | 0% | |||||||||||||||||
Total operating income | $ | 29.7 | $ | 47.3 | $ | (17.6 | ) | (37)% | $ | 66.8 | $ | 97.7 | $ | (30.9 | ) | (32)% | ||||||||||||||
* Other includes restructuring charges, loss (gain) on sale or disposal of assets, net, curtailment loss and transaction costs. | ||||||||||||||||||||||||||||||
Cincinnati Bell Inc. | ||||||||||||||||
Segment Metric Information | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||
2015 | 2015 | 2014 | 2014 | 2014 | ||||||||||||
Residential voice lines | ||||||||||||||||
Legacy voice lines | 161.5 | 170.5 | 181.6 | 192.6 | 204.1 | |||||||||||
Fioptics voice lines | 64.2 | 60.0 | 56.7 | 54.2 | 51.6 | |||||||||||
Total residential voice lines | 225.7 | 230.5 | 238.3 | 246.8 | 255.7 | |||||||||||
Business voice lines | ||||||||||||||||
Legacy voice lines | 227.5 | 233.0 | 238.0 | 242.1 | 246.4 | |||||||||||
VoIP lines* | 82.4 | 73.9 | 70.0 | 63.3 | 60.2 | |||||||||||
Total business voice lines | 309.9 | 306.9 | 308.0 | 305.4 | 306.6 | |||||||||||
Total voice lines | 535.6 | 537.4 | 546.3 | 552.2 | 562.3 | |||||||||||
Long distance lines | 349.7 | 355.5 | 362.8 | 371.4 | 378.6 | |||||||||||
Internet subscribers | ||||||||||||||||
DSL | 142.7 | 149.6 | 156.2 | 163.8 | 172.0 | |||||||||||
Fioptics | 132.4 | 123.1 | 113.7 | 106.7 | 98.3 | |||||||||||
275.1 | 272.7 | 269.9 | 270.5 | 270.3 | ||||||||||||
Fioptics video subscribers | 101.5 | 95.8 | 91.4 | 87.8 | 82.5 | |||||||||||
Fioptics units passed | 382.3 | 357.6 | 335.0 | 323.0 | 307.1 | |||||||||||
* | VoIP lines include Fioptics business voice lines. | |||||||||||||||
Cincinnati Bell Inc. | |||||||||
Net Debt and Common Shares Outstanding | |||||||||
(Unaudited) | |||||||||
(Dollars and shares in millions) | |||||||||
June 30, | December 31, | ||||||||
2015 | 2014 | ||||||||
Receivables Facility | $ | 2.6 | $ | 19.2 | |||||
8 3/4% Senior Subordinated Notes due 2018 | — | 300.0 | |||||||
Corporate Credit Agreement - Tranche B Term Loan | 530.6 | 533.2 | |||||||
8 3/8% Senior Notes due 2020 | 616.1 | 661.2 | |||||||
7 1/4% Senior Notes due 2023 | 40.0 | 40.0 | |||||||
Various Cincinnati Bell Telephone notes | 134.5 | 134.5 | |||||||
Capital leases and other debt | 69.3 | 16.1 | |||||||
Net unamortized discount | (1.6 | ) | (3.2 | ) | |||||
Total debt | 1,391.5 | 1,701.0 | |||||||
Less: Cash and cash equivalents | (14.8 | ) | (57.9 | ) | |||||
Net debt (as defined by the company) | $ | 1,376.7 | $ | 1,643.1 | |||||
Corporate Credit Agreement availability | $ | 175.0 | $ | 150.0 | |||||
Common shares outstanding | 209.9 | 209.3 | |||||||
Cincinnati Bell Inc. | ||||||||||||||||||
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||
Three Months Ended June 30, 2015 | ||||||||||||||||||
Entertainment and 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 | |||||||||||||||||
Loss from CyrusOne equity method investment | 1.3 | |||||||||||||||||
Gain on sale of CyrusOne equity method investment | (295.2 | ) | ||||||||||||||||
Loss on extinguishment of debt | 13.5 | |||||||||||||||||
Operating income (loss) (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 | 39 | % | 9 | % | — | 26 | % | |||||||||||
Three Months Ended June 30, 2014 | ||||||||||||||||||
Entertainment and Communications | IT Services & Hardware | Corporate | Total Company | |||||||||||||||
Net income (GAAP) | $ | 114.2 | ||||||||||||||||
Less: | ||||||||||||||||||
Loss from discontinued operations (net of tax) | (9.5 | ) | ||||||||||||||||
Income from continuing operations (GAAP) | $ | 123.7 | ||||||||||||||||
Add: | ||||||||||||||||||
Income tax expense | 75.4 | |||||||||||||||||
Interest expense | 39.5 | |||||||||||||||||
Loss from CyrusOne equity method investment | 2.4 | |||||||||||||||||
Gain on sale of CyrusOne equity method investment | (192.8 | ) | ||||||||||||||||
Other expense (income), net | (0.9 | ) | ||||||||||||||||
Operating income (loss) (GAAP) | $ | 49.6 | $ | 2.8 | $ | (5.1 | ) | $ | 47.3 | |||||||||
Add: | ||||||||||||||||||
Depreciation and amortization | 28.2 | 2.8 | — | 31.0 | ||||||||||||||
Restructuring charges | 1.1 | — | 0.1 | 1.2 | ||||||||||||||
(Gain) loss on sale or disposal of assets | (0.1 | ) | — | — | (0.1 | ) | ||||||||||||
Pension and other retirement plan expenses | 3.6 | — | 0.4 | 4.0 | ||||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 82.4 | $ | 5.6 | $ | (4.6 | ) | $ | 83.4 | |||||||||
Adjusted EBITDA Margin | 45 | % | 6 | % | — | 29 | % | |||||||||||
Year-over-year dollar change in Adjusted EBITDA | $ | (12.1 | ) | $ | 3.9 | $ | (0.2 | ) | $ | (8.4 | ) | |||||||
Year-over-year percentage change in Adjusted EBITDA | (15 | )% | 70 | % | 4 | % | (10 | )% | ||||||||||
Cincinnati Bell Inc. | ||||||||||||||||||
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||
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 | |||||||||||||||||
Loss from CyrusOne equity method investment | 4.4 | |||||||||||||||||
Gain on sale of CyrusOne equity method investment | (295.2 | ) | ||||||||||||||||
Loss on extinguishment of debt | 13.5 | |||||||||||||||||
Other expense (income), net | 0.4 | |||||||||||||||||
Operating income (loss) (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 | 39 | % | 8 | % | — | 27 | % | |||||||||||
Six Months Ended June 30, 2014 | ||||||||||||||||||
Entertainment and Communications | IT Services & Hardware | Corporate | Total Company | |||||||||||||||
Net income (GAAP) | $ | 121.2 | ||||||||||||||||
Less: | ||||||||||||||||||
Loss from discontinued operations (net of tax) | (8.4 | ) | ||||||||||||||||
Income from continuing operations (GAAP) | $ | 129.6 | ||||||||||||||||
Add: | ||||||||||||||||||
Income tax expense | 81.9 | |||||||||||||||||
Interest expense | 78.3 | |||||||||||||||||
Loss from CyrusOne equity method investment | 1.9 | |||||||||||||||||
Gain on sale of CyrusOne equity method investment | (192.8 | ) | ||||||||||||||||
Other expense (income), net | (1.2 | ) | ||||||||||||||||
Operating income (loss) (GAAP) | $ | 101.4 | $ | 8.2 | $ | (11.9 | ) | $ | 97.7 | |||||||||
Add: | ||||||||||||||||||
Depreciation and amortization | 56.3 | 5.6 | 0.2 | 62.1 | ||||||||||||||
Restructuring charges | 1.1 | — | 0.1 | 1.2 | ||||||||||||||
(Gain) loss on sale or disposal of assets | (0.2 | ) | — | 0.1 | (0.1 | ) | ||||||||||||
Transaction costs | — | — | 0.7 | 0.7 | ||||||||||||||
Pension and other retirement plan expenses | 8.1 | — | 0.8 | 8.9 | ||||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 166.7 | $ | 13.8 | $ | (10.0 | ) | $ | 170.5 | |||||||||
Adjusted EBITDA Margin | 45 | % | 7 | % | — | 30 | % | |||||||||||
Year-over-year dollar change in Adjusted EBITDA | $ | (21.0 | ) | $ | 3.5 | $ | 0.8 | $ | (16.7 | ) | ||||||||
Year-over-year percentage change in Adjusted EBITDA | (13 | )% | 25 | % | (8 | )% | (10 | )% | ||||||||||
Cincinnati Bell Inc. | |||||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||
(Unaudited) | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Cash provided by operating activities | $ | 26.4 | $ | 56.0 | $ | 32.7 | $ | 93.8 | |||||||||
Capital expenditures | (74.6 | ) | (41.2 | ) | (132.5 | ) | (75.5 | ) | |||||||||
Dividends received from CyrusOne | 9.0 | 9.3 | 15.0 | 16.4 | |||||||||||||
Proceeds from sale of CyrusOne equity method investment | 426.0 | 355.9 | 426.0 | 355.9 | |||||||||||||
Other, net | — | (5.6 | ) | (0.1 | ) | (3.7 | ) | ||||||||||
Cash provided by investing activities | 360.4 | 318.4 | 308.4 | 293.1 | |||||||||||||
Net decrease in corporate credit and receivables facilities with initial maturities less than 90 days | (24.1 | ) | (27.3 | ) | (16.6 | ) | (31.4 | ) | |||||||||
Repayment of debt | (358.1 | ) | (3.1 | ) | (361.4 | ) | (8.3 | ) | |||||||||
Debt issuance costs | (0.4 | ) | — | (0.4 | ) | — | |||||||||||
Dividends paid on preferred stock | (2.6 | ) | (2.6 | ) | (5.2 | ) | (5.2 | ) | |||||||||
Proceeds from exercise of options and warrants | — | 0.6 | — | 1.2 | |||||||||||||
Other, net | (0.2 | ) | 1.0 | (0.6 | ) | (0.6 | ) | ||||||||||
Cash used in financing activities | (385.4 | ) | (31.4 | ) | (384.2 | ) | (44.3 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | 1.4 | 343.0 | (43.1 | ) | 342.6 | ||||||||||||
Cash and cash equivalents at beginning of period | 13.4 | 4.2 | 57.9 | 4.6 | |||||||||||||
Cash and cash equivalents at end of period | $ | 14.8 | $ | 347.2 | $ | 14.8 | $ | 347.2 | |||||||||
Reconciliation of GAAP Cash Flow to | |||||||||||||||||
Free Cash Flow (as defined by the company) | |||||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 1.4 | $ | 343.0 | $ | (43.1 | ) | $ | 342.6 | ||||||||
Adjustments: | |||||||||||||||||
Net decrease in corporate credit and receivables facilities with initial maturities less than 90 days | 24.1 | 27.3 | 16.6 | 31.4 | |||||||||||||
Repayment of debt | 358.1 | 3.1 | 361.4 | 8.3 | |||||||||||||
Discontinued operations* | 5.4 | (12.9 | ) | 18.4 | (17.1 | ) | |||||||||||
Decommissioning of wireless towers | 1.5 | — | 1.5 | — | |||||||||||||
Debt issuance costs | 0.4 | — | 0.4 | — | |||||||||||||
Transaction costs | — | 0.7 | — | 0.7 | |||||||||||||
Proceeds from sale of CyrusOne equity method investment | (426.0 | ) | (355.9 | ) | (426.0 | ) | (355.9 | ) | |||||||||
Free cash flow | (35.1 | ) | 5.3 | (70.8 | ) | 10.0 | |||||||||||
Income tax payments | $ | 0.9 | $ | 1.2 | $ | 0.9 | $ | 0.3 | |||||||||
*For the quarter ended June 30, 2015 and 2014, our wireless business generated free cash flow of ($5.4) million and $12.9 million, respectively. For the six months ended June 30, 2015 and 2014, our wireless business generated free cash flow of ($18.4) million and $17.1 million, respectively. Wireless operations are now reported as discontinued operations within the consolidated financial statements. | |||||||||||||||||
Cincinnati Bell Inc. | ||||
Free Cash Flow (as defined by the company) | ||||
(Unaudited) | ||||
(Dollars in millions) | ||||
Free Cash Flow for the three months ended June 30, 2014 | $ | 5.3 | ||
Decrease in Adjusted EBITDA | (8.4 | ) | ||
Increase in capital expenditures from continuing operations | (34.0 | ) | ||
Increase in interest payments | (1.9 | ) | ||
Increase in pension and postretirement payments and contributions | (2.4 | ) | ||
Change in working capital and other | 6.3 | |||
Free Cash Flow for the three months ended June 30, 2015 | $ | (35.1 | ) | |
Free Cash Flow for the six months ended June 30, 2014 | $ | 10.0 | ||
Decrease in Adjusted EBITDA | (16.7 | ) | ||
Increase in capital expenditures from continuing operations | (63.2 | ) | ||
Decrease in interest payments | 13.2 | |||
Decrease in pension and postretirement payments and contributions | 0.8 | |||
Change in working capital and other | (14.9 | ) | ||
Free Cash Flow for the six months ended June 30, 2015 | $ | (70.8 | ) | |
Cincinnati Bell Inc. | ||||||||||||||||||||
Capital Expenditures | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | ||||||||||||||||
Entertainment and Communications | $ | 70.1 | $ | 54.0 | $ | 57.6 | $ | 41.8 | $ | 38.1 | ||||||||||
IT Services and Hardware | 4.4 | 3.9 | 3.4 | 3.5 | 2.5 | |||||||||||||||
Corporate | 0.1 | — | 0.2 | — | — | |||||||||||||||
Total capital expenditures from continuing operations | $ | 74.6 | $ | 57.9 | $ | 61.2 | $ | 45.3 | $ | 40.6 | ||||||||||
Discontinued operations | $ | — | $ | — | $ | — | $ | 0.3 | $ | 0.6 | ||||||||||
Total capital expenditures | $ | 74.6 | $ | 57.9 | $ | 61.2 | $ | 45.6 | $ | 41.2 | ||||||||||
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] | — | |||||||||
Loss 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] | — | |||||||||
Loss from CyrusOne equity method investment | 1.3 | — | 1.3 | |||||||||||
Gain on sale of CyrusOne equity method investment | (295.2 | ) | 295.2 | [F] | — | |||||||||
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 on May 7, 2015 at a redemption rate of 102.188% and due to the redemption of $45.1 million of the outstanding 8 3/8% Senior Notes due 2020 during the second quarter at an average redemption price of 106.450%. | |||||||||||||
F | Gain on sale of CyrusOne equity method 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) | ||||||||||||||
Three | ||||||||||||||
Three | Months Ended | |||||||||||||
Months Ended | June 30, 2014 | |||||||||||||
June 30, 2014 | Before Special Items | |||||||||||||
(GAAP) | Special Items | (Non-GAAP) | ||||||||||||
Revenue | $ | 283.0 | $ | — | $ | 283.0 | ||||||||
Costs and expenses | ||||||||||||||
Cost of services and products | 154.1 | — | 154.1 | |||||||||||
Selling, general and administrative | 49.5 | — | 49.5 | |||||||||||
Depreciation and amortization | 31.0 | — | 31.0 | |||||||||||
Restructuring charges | 1.2 | (1.2 | ) | [A] | — | |||||||||
Gain on sale or disposal of assets, net | (0.1 | ) | 0.1 | [B] | — | |||||||||
Operating income | 47.3 | 1.1 | 48.4 | |||||||||||
Interest expense | 39.5 | — | 39.5 | |||||||||||
Loss from CyrusOne equity method investment | 2.4 | — | 2.4 | |||||||||||
Gain from sale of CyrusOne equity method investment | (192.8 | ) | 192.8 | [C] | — | |||||||||
Other income, net | (0.9 | ) | — | (0.9 | ) | |||||||||
Income from continuing operations before income taxes | 199.1 | (191.7 | ) | 7.4 | ||||||||||
Income tax expense | 75.4 | (69.0 | ) | 6.4 | ||||||||||
Income from continuing operations | 123.7 | (122.7 | ) | 1.0 | ||||||||||
Loss from discontinued operations (net of tax) | (9.5 | ) | 9.5 | — | ||||||||||
Net income | 114.2 | (113.2 | ) | 1.0 | ||||||||||
Preferred stock dividends | 2.6 | — | 2.6 | |||||||||||
Net income applicable to common shareowners | $ | 111.6 | $ | (113.2 | ) | $ | (1.6 | ) | ||||||
Weighted average diluted common shares | 209.4 | 208.5 | [D] | 208.5 | ||||||||||
Diluted earnings per common share* | $ | 0.53 | $ | (0.54 | ) | $ | (0.01 | ) | ||||||
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%): | ||||||||||||||
A | Restructuring charges consist of employee severance associated with outsourcing portions of our IT department. | |||||||||||||
B | Gain on sale of wireline copper cabling. | |||||||||||||
C | Gain on sale of CyrusOne equity method investment. | |||||||||||||
D | Dilutive effect of common stock based on net income excluding special items. | |||||||||||||
* | 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] | — | |||||||||
Loss from CyrusOne equity method investment | 4.4 | — | 4.4 | |||||||||||
Gain on sale of CyrusOne equity method investment | (295.2 | ) | 295.2 | [F] | — | |||||||||
Other expense, net | 0.4 | — | 0.4 | |||||||||||
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 on May 7, 2015 at a redemption rate of 102.188% and due to the redemption of $45.1 million of the outstanding 8 3/8% Senior Notes due 2020 during the second quarter at an average redemption price of 106.450%. | |||||||||||||
F | Gain on sale of CyrusOne equity method 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. | ||||||||||||||
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, 2014 | |||||||||||||
June 30, 2014 | Before Special Items | |||||||||||||
(GAAP) | Special Items | (Non-GAAP) | ||||||||||||
Revenue | $ | 565.2 | $ | — | $ | 565.2 | ||||||||
Costs and expenses | ||||||||||||||
Cost of services and products | 304.8 | — | 304.8 | |||||||||||
Selling, general and administrative | 98.8 | — | 98.8 | |||||||||||
Depreciation and amortization | 62.1 | — | 62.1 | |||||||||||
Restructuring charges | 1.2 | (1.2 | ) | [A] | — | |||||||||
Gain on sale or disposal of assets, net | (0.1 | ) | 0.1 | [B] | — | |||||||||
Transaction costs | 0.7 | (0.7 | ) | [C] | — | |||||||||
Operating income | 97.7 | 1.8 | 99.5 | |||||||||||
Interest expense | 78.3 | — | 78.3 | |||||||||||
Loss from CyrusOne equity method investment | 1.9 | — | 1.9 | |||||||||||
Gain on sale of CyrusOne equity method investment | (192.8 | ) | 192.8 | [D] | — | |||||||||
Other income, net | (1.2 | ) | — | (1.2 | ) | |||||||||
Income from continuing operations before income taxes | 211.5 | (191.0 | ) | 20.5 | ||||||||||
Income tax expense | 81.9 | (68.8 | ) | 13.1 | ||||||||||
Income from continuing operations | 129.6 | (122.2 | ) | 7.4 | ||||||||||
Loss from discontinued operations (net of tax) | (8.4 | ) | 8.4 | — | ||||||||||
Net income | 121.2 | (113.8 | ) | 7.4 | ||||||||||
Preferred stock dividends | 5.2 | — | 5.2 | |||||||||||
Net income applicable to common shareowners | $ | 116.0 | $ | (113.8 | ) | $ | 2.2 | |||||||
Weighted average diluted common shares | 209.2 | 209.2 | 209.2 | |||||||||||
Diluted earnings per common share* | $ | 0.55 | $ | (0.54 | ) | $ | 0.01 | |||||||
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%): | ||||||||||||||
A | Restructuring charges consist of employee severance associated with outsourcing portions of our IT department. | |||||||||||||
B | Gain on sale of wireline copper cabling. | |||||||||||||
C | Transaction costs relate to expenses incurred for agreement to sell Wireless spectrum licenses and certain other assets. | |||||||||||||
D | Gain on sale of CyrusOne equity method 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) | |||||||||
2015 Operating Income (GAAP) Guidance | $ | 134 | |||||||
Add: | |||||||||
Depreciation and amortization | 135 | ||||||||
Restructuring | 6 | ||||||||
Pension and other retirement plan expenses | 22 | ||||||||
2015 Adjusted EBITDA (Non-GAAP) Guidance | $ | 297 | * | ||||||
* 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 2015 Results July 30, 2015
Today’s Agenda Highlights & Strategic Initiatives Ted Torbeck, President & Chief Executive Officer Financial Overview & Segment Results Leigh Fox, Chief Financial 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
Q2 2015 Financial Results Consolidated revenue totaled $286 million, up $3 million year- over-year Revenue from strategic and consumer business products was $130 million, up 20% from a year ago Strong Adjusted EBITDA of $75 million Sold 14 million CyrusOne partnership units Proceeds totaling $426 million were primarily used to repay debt Announced agreement to sell additional 6 million partnership units in July for proceeds of $170 million Remaining 11% ownership valued at approximately $250 million Impressive Metrics Fioptics video subscribers now exceed 100,000 Fioptics internet subscribers increased to 132,400, adding 9,300 new customers in the quarter Total internet subscribers reached a record-high 275,100 as of the end of the quarter Second Quarter 2015 Highlights 6
$32 $43 $67 $61 Q2 2014 Q2 2015 $72 $85 $60 $56 $68 $62 Q2 2014 Q2 2015 $40 $42 $60 $56 Q2 2014 Q2 2015 Business Market Update Total Business Market Revenue $204 $203 Revenue from business customers accounts for approximately 70% of consolidated revenue Strategic revenue accounts for approximately 60% of recurring revenue Entertainment & Communications Revenue $105 $99 IT Services & Hardware Revenue $99 $104 Net of intercompany eliminations Y/Y (9)% (7)% 18% Y/Y Y/Y (7)% 5% (9)% 34% 7 ($ in millions) [2] [1] [1] [2] [1] Revenue for backhaul services provided to our discontinued wireless operations totaled $4 million in Q2 2014 Entertainment & Communications Integration revenue totaled $1 million in Q2 2014 and 2015 [3] [1] Integration Strategic Legacy Backhaul [3]
$35 $46 $43 $36 Q2 2014 Q2 2015 Strategic Legacy Integration Consumer Market Update Fioptics Penetration: ‒ Video – 27%, Internet – 35%, Voice – 18% Fioptics monthly ARPU for the quarter was up approximately 3% from 2014. Q2 2015 ARPUs are as follows: ‒ Video – $77, Internet – $43, Voice – $30 Total video churn was 2.5% for the quarter ‒ Single-family churn was 2.1% ‒ Apartment churn was 5.1% 8 Total Fioptics revenue for the quarter totaled $45 million, up 32% compared to the prior year Fioptics is available to 382k addresses, or 47% of Greater Cincinnati ‒ Passed 24,700 new addresses in Q2 2015 $79 $83 Entertainment & Communications Revenue Y/Y (16)% 31% ($ in millions) 83 102 98 132 55 69 Q2 2014 Q2 2015 Video Subs Internet Subs Voice Subs Total Fioptics Subscribers (in thousands) [1] Total Fioptics revenue includes $2 million from business customers [1] [2] Integration revenue totaled $1 million Q2 2014 and 2015 [2]
Leigh Fox Chief Financial Officer 9
$75 $286 ($ in millions) Second Quarter Financial Summary Entertainment & Communications IT Services & Hardware Corporate Eliminations 10 Revenue $283 $83 Adjusted EBITDA Total revenue of $286 million in the second quarter of 2015, up $3 million from prior year Income from continuing operations totaled $181 million – including the gain on the sale of CyrusOne partnership units and a loss on extinguishment of debt Strong second quarter Adjusted EBITDA of $75 million $102 $185
($ in millions) Entertainment & Communications Revenue and Adjusted EBITDA Integration Strategic Legacy $185 $182 11 Integration revenue totaled $2 million in Q2 2014 and Q2 2015 Strategic revenue growth in Q2 2015 offset decline from legacy products Adjusted EBITDA Margin for Q2 2015 was 39% - consistent with expectations Voice line loss was 5% – consistent with prior year ‒ Business lines increased 1% ‒ Residential line decreased 12% Backhaul Revenue for backhaul services provided to our discontinued wireless operations totaled $4 million in Q2 2014 [1] [2] [1] [2]
($ in millions) IT Services & Hardware Revenue and Adjusted EBITDA Revenue of $106 million for Q2 2015, up 5% from Q2 2014 ‒ Strategic Managed and Professional Services increased 32% compared to the prior year ‒ Telecom & IT Equipment revenue of $60 million for Q2 2015 was down from the prior year due to the cyclical nature of these sales Adjusted EBITDA totaled $10 million, up $4 million from the prior year Adjusted EBITDA margin was 9%, up from 6% a year ago Integration Revenue Strategic Revenue $102 $106 12 $6 $10
Capital Structure Liquidity Leverage Ratio 13 Q2 2015 Cash and Cash Equivalents 15$ Corporate Credit Facility 175 Receivables Facility 110 Liquidity (June 30, 2015) 300 CyrusOne proceeds 170 Required debt repayments (145) Liquidity as Adjusted 325$ Debt repayments totaled $382 million in the quarter – decreasing interest payments by approximately $30 million annually Repaid approximately $110 million of our outstanding 8.375% Senior Notes in third quarter of 2015 at an average redemption rate of 105% (as of July 30, 2015) Current leverage as adjusted for our remaining 11 percent investment in CyrusOne is well within a reasonable range [2] [1] 2015 leverage calculated based on Adjusted EBITDA guidance [1] [2] Corporate credit agreement requires 85 percent of CyrusOne proceeds be used to repay debt 4.6x 4.1x 3.2x 1.0 2.0 3.0 4.0 5.0 6.0 2011 2012 2013 2014 Jun 2015 Leverage Leverage Adj. for CONE Sale Leverage Adj. for CONE Investment
Q2 2015 YTD 2015 Adjusted EBITDA 75$ 154 Interest Payments (44) (65) Capital Expenditures (75) (133) Pension and OPEB Payments (10) (15) Dividends from CyrusOne 9 15 Working Capital and Other 10 (27) Free Cash Flow (35)$ (71)$ Q2 2015 Free Cash Flow and Capital Expenditures 14 ($ in millions) Free Cash Flow Capit l Expenditures Certain 2015 Free Cash Flow Items Interest payments ~ $110 million Pension and OPEB payments ~ $20 million CyrusOne dividends ~ $22 million Capital Expenditures: $270 - $280 million Q2 2015 YTD 2015 Construction 20$ 37 Installation 16 21 Value added 12 25 Total Fioptics 48$ 83 Other Strategic 14 28 Total Strategic Investment 62$ 111 Maintenance 13 22 75$ 133
2015 Guidance 2015 Guidance Revenue $ 1.1 billion Adjusted EBITDA $297 million* * Plus or minus 2 percent 15
Appendix 16
CBB Consolidated Results 17 ($ in millions, except per share amounts) 2015 2014 2015 2014 Revenue 285.8$ 283.0$ 578.7$ 565.2$ Costs and expenses Cost of services and products 162.2 154.1 328.4 304.8 Selling, general and administrative 57.0 49.5 109.2 98.8 Depreciation and amortization 34.0 31.0 66.6 62.1 Restructuring charges 2.3 1.2 5.7 1.2 Loss (gain) on sale or disposal of assets, net 0.3 (0.1) 1.7 (0.1) Curtailment Loss 0.3 - 0.3 - Transaction costs - - - 0.7 Operating income 29.7 47.3 66.8 97.7 Interest expense 28.0 39.5 60.7 78.3 Loss on extinguishment of debt 13.5 - 13.5 - Loss from CyrusOne equity method investment 1.3 2.4 4.4 1.9 Gain on sale of CyrusOne equity method investment (295.2) (192.8) (295.2) (192.8) Other expense (income), net - (0.9) 0.4 (1.2) Income from continuing operations before income taxes 282.1 199.1 283.0 211.5 Income tax expense 101.4 75.4 102.0 81.9 Income from continuing operations 180.7 123.7 181.0 129.6 Income (loss) from discontinued operations (net of tax) 10.9 (9.5) 59.8 (8.4) Net income 191.6 114.2 240.8 121.2 Preferred stock dividends 2.6 2.6 5.2 5.2 Net income applicable to common shareowners 189.0$ 111.6$ 235.6$ 116.0$ Basic net earnings per common share Earnings from continuing operations 0.85$ 0.58$ 0.84$ 0.60$ Earnings (loss) from discontinued operations 0.05 (0.04) 0.29 (0.04) Basic net earnings per common share 0.90$ 0.54$ 1.13$ 0.56$ Diluted net earnings per common share Earnings from continuing operations 0.84$ 0.58$ 0.84$ 0.59$ Earnings (loss) from discontinued operations 0.05 (0.05) 0.28 (0.04) Diluted net earnings per common share 0.89$ 0.53$ 1.12$ 0.55$ Three Months Ended June 30, Six Months Ended June 30,
Revenue Classifications Voice STRATEGIC LEGACY INTEGRATION Fioptics Voice Switched Access Digital Trunking Data Fioptics Internet DWDM DSL (> 10 meg) Metro-Ethernet Dedicated Internet DSL (< 10 meg) Dial up Internet TDM DSO, DS1, DS3 Long Distance/ VoIP VoIP Private Line MPLS Audio Conferencing Managed/ Professional Services Managed Services - Monitoring/Management - Data Storage - Data Security - Virtual Data Center Professional Services - Staff Augmentation - IT Consulting Telecom & IT Equipment Hardware Installation Maintenance Maintenance Information Services Long Distance Entertainment Fioptics Video 18
Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data 42.3$ -$ Voice - local service 5.6 - Long distance and VoIP 16.3 - Entertainment 23.0 - Other 0.6 - Managed & Professional Services - 44.6 Hardware - - Total Strategic 87.8 44.6 132.4 (2.2) 130.2 Legacy Data 42.3$ -$ Voice - local service 37.5 - Long distance and VoIP 10.7 - Entertainment - - Other 1.8 - Managed & Professional Services - - Hardware - - Total Legacy 92.3 - 92.3 (0.1) 92.2 Integration Data -$ -$ Voice - local service 1.6 - Long distance and VoIP 0.5 - Entertainment - - Other 0.2 - Managed & Professional Services - 1.3 Hardware - 60.4 Total Integration 2.3 61.7 64.0 (0.6) 63.4 Total Revenue 182.4$ 106.3$ 288.7$ (2.9)$ 285.8$ Eliminations 0.4 2.5 2.9 182.0$ 103.8$ 285.8$ Q2 2015 Revenue – MD&A Q2 2015 Strategic, Legacy and Integration 19 ($ in millions)
20 Revenue – MD&A Q2 2014 Strategic, Legacy and Integration ($ in millions) Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data 37.5$ -$ Voice - local service 5.7 - Long distance and VoIP 14.4 - Entertainment 18.3 - Other 1.2 - Managed & Professional Services - 33.8 Hardware - - Total Strategic 77.1 33.8 110.9 (2.0) 108.9 Legacy Data 46.7$ -$ Voice - local service 44.5 - Long distance and VoIP 12.0 - Entertainment - - Other 2.0 - Managed & Professional Services - - Hardware - - Total Legacy 105.2 - 105.2 - 105.2 Integration Data -$ -$ Voice - local service 1.7 - Long distance and VoIP 0.4 - Entertainment 0.1 - Other 0.2 - Managed & Professional Services - 1.9 Hardware - 65.9 Total Integration 2.4 67.8 70.2 (1.3) 68.9 Total Revenue 184.7$ 101.6$ 286.3$ (3.3)$ 283.0$ Eliminations 0.3 3.0 3.3 184.4$ 98.6$ 283.0$ Q2 2014
Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data 84.9$ -$ Voice - local service 11.3 - Long distance and VoIP 32.1 - Entertainment 44.5 - Other 1.2 - Managed & Professional Services - 85.3 Hardware - - Total Strategic 174.0 85.3 259.3 (4.3) 255.0 Legacy Data 87.0$ -$ Voice - local service 77.7 - Long distance and VoIP 21.6 - Entertainment - - Other 3.6 - Managed & Professional Services - - Hardware - - Total Legacy 189.9 - 189.9 (0.3) 189.6 Integration Data -$ -$ Voice - local service 3.1 - Long distance and VoIP 1.0 - Entertainment - - Other 2.5 - Managed & Professional Services - 2.9 Hardware - 125.7 Total Integration 6.6 128.6 135.2 (1.1) 134.1 Total Revenue 370.5$ 213.9$ 584.4$ (5.7)$ 578.7$ Eliminations 0.7 5.0 5.7 369.8$ 208.9$ 578.7$ YTD Q2 2015 Revenue – MD&A YTD 2015 Strategic, Legacy and Integration 21 ($ in millions)
22 Revenue – MD&A YTD 2014 Strategic, Legacy and Integration ($ in millions) Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data 72.6$ -$ Voice - local service 10.2 - Long distance and VoIP 28.2 - Entertainment 35.2 - Other 2.5 - Managed & Professional Services - 66.7 Hardware - - Total Strategic 148.7 66.7 215.4 (4.2) 211.2 Legacy Data 94.6$ -$ Voice - local service 91.4 - Long distance and VoIP 24.3 - Entertainment - - Other 4.1 - Managed & Professional Services - - Hardware - - Total Legacy 214.4 - 214.4 - 214.4 Integration Data -$ -$ Voice - local service 3.4 - Long distance and VoIP 1.2 - Entertainment 0.2 - Other 0.4 - Managed & Professional Services - 3.0 Hardware - 133.8 Total Integration 5.2 136.8 142.0 (2.4) 139.6 Total Revenue 368.3$ 203.5$ 571.8$ (6.6)$ 565.2$ Eliminations 0.5 6.1 6.6 367.8$ 197.4$ 565.2$ YTD Q2 2014
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