Form 8-K CINCINNATI BELL INC For: Nov 04

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November 4, 2015 7:17 AM EST


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: November 4, 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 November 4, 2015, Cincinnati Bell Inc. reported its financial results for the third quarter 2015. The earnings release is attached as Exhibit 99.1.
 
Section 7 - Regulation FD
 
Item 7.01     Regulation FD Disclosure
 
On November 4, 2015, Theodore H. Torbeck, the Company's president and chief executive officer, and Leigh R. Fox, the Company's chief financial officer, will present third 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 November 4, 2015
 
 
 
 
Exhibit 99.2
Presentation made during the Cincinnati Bell third quarter 2015 earnings conference call on November 4, 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 November 4, 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:
November 4, 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 November 4, 2015
 
 
99.2
Presentation made during the Cincinnati Bell third quarter 2015 earnings conference call on November 4, 2015





Cincinnati Bell Reports Third Quarter 2015 Results

HIGHLIGHTS
•
Strategic revenue from consumer and business products increased 22 percent year-over-year
•
Fioptics revenue totaled $49 million, up 34 percent from a year ago
•
Record high 7 thousand Fioptics video and 11 thousand Fioptics internet subscriber net activations
•
Strong third quarter Adjusted EBITDA1 of $77 million
•
Sold 6 million CyrusOne partnership units for $170 million

CINCINNATI - November 4, 2015 - Cincinnati Bell Inc. (NYSE: CBB) today announced financial results for the third quarter of 2015, highlighted by strategic revenue totaling $138 million, an increase of 22 percent over the prior year. Fioptics revenue for the quarter totaled $49 million, up 34 percent year-over-year as the Company's Fioptics video and internet net activations both increased by more than 30 percent compared to the prior year. Strategic managed and professional services revenue was $46 million in the quarter, up 31 percent compared to the prior year.

"Strong strategic revenue growth for both consumer and business markets has us well positioned to achieve the high-end of our financial guidance for the year," said Ted Torbeck, president and chief executive officer. Torbeck also added, "Demand for our strategic products remains high. We continue to have success penetrating our market with Fioptics, and our IT services revenue growth continues to be impressive."

CONSOLIDATED RESULTS2  
Consolidated revenue for the third quarter of 2015 was $300 million, up $2 million from the prior year after excluding revenue from services provided to our wireless business which discontinued operations effective March 31, 2015. Operating income for the quarter totaled $36 million and Adjusted EBITDA equaled $77 million. Income from continuing operations was $79 million and included a $118 million gain on the sale of 6 million CyrusOne partnership units in the quarter.

Entertainment and Communications Segment
•
Entertainment and Communications revenue for the quarter totaled $185 million, up $5 million compared to the prior year after excluding revenue from services provided to our discontinued wireless business.
◦
Fioptics revenue for the quarter was $49 million, up 34 percent from the prior year.
◦
Strategic revenue for business customers totaled $44 million (including $3 million of Fioptics revenue) for the quarter, up $4 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 $68 million, respectively.
•
Fioptics video subscribers totaled 108,800 at the end of the third quarter, up 21,000 subscribers compared to the same period in 2014.
•
Record high 281,300 total internet subscribers at the end of the third quarter, up 10,800 subscribers from a year ago.
•
In the third quarter of 2015, we passed an additional 25,800 units with Fioptics which is now available to 408 thousand addresses within Greater Cincinnati.

IT Services and Hardware Segment
•
Revenue of $117 million for the quarter was down 3 percent compared to the prior year.
◦
Strategic managed and professional services revenue was $46 million in the quarter, up 31 percent over the prior year.
◦
Hardware revenue was $69 million for the quarter, compared to $83 million in the third quarter of 2014.
•
Operating income and Adjusted EBITDA for the quarter totaled $8 million and $10 million, respectively.

Investment in CyrusOne
•
Completed the sale of 6 million partnership units for cash proceeds totaling $170 million.
•
Remaining 11 percent ownership of CyrusOne valued at approximately $300 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 November 4 at 10:00 a.m. (ET) to discuss its results for the third 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 (877) 397-0286. Callers located outside of the U.S. and Canada may dial (719) 325-4794. 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 Wednesday, November 18, 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 806309. 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 nine months ended September 30, 2015 and 2014 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 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. (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 (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
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
 
 
 
 
September 30,
 
Change
 
September 30,
 
Change
 
 
 
 
 
2015
 
2014
 
$
 
%
 
2015
 
2014
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
299.8

 
$
301.4

 
$
(1.6
)
 
(1)%
 
$
878.5

 
$
866.6

 
$
11.9

 
1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
175.6

 
169.5

 
6.1

 
4%
 
504.0

 
474.3

 
29.7

 
6%
 
 
Selling, general and administrative
 
52.5

 
52.9

 
(0.4
)
 
(1)%
 
161.7

 
151.7

 
10.0

 
7%
 
 
Depreciation and amortization
 
35.8

 
32.3

 
3.5

 
11%
 
102.4

 
94.4

 
8.0

 
8%
 
 
Restructuring charges (reversals)
 
0.3

 
(1.3
)
 
1.6

 
n/m
 
6.0

 
(0.1
)
 
6.1

 
n/m
 
 
(Gain) loss on sale or disposal of assets, net
 
(1.4
)
 
—

 
(1.4
)
 
n/m
 
0.3

 
(0.1
)
 
0.4

 
n/m
 
 
Curtailment loss
 
—

 
—

 
—

 
n/m
 
0.3

 
—

 
0.3

 
n/m
 
 
Transaction costs
 
0.8

 
0.2

 
0.6

 
n/m
 
0.8

 
0.9

 
(0.1
)
 
(11)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
36.2

 
47.8

 
(11.6
)
 
(24)%
 
103.0

 
145.5

 
(42.5
)
 
(29)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
21.5

 
34.7

 
(13.2
)
 
(38)%
 
82.2

 
113.0

 
(30.8
)
 
(27)%
 
Loss on extinguishment of debt
 
7.8

 
19.4

 
(11.6
)
 
(60)%
 
21.3

 
19.4

 
1.9

 
10%
 
Loss from CyrusOne equity method investment
 
0.8

 
—

 
0.8

 
n/m
 
5.2

 
1.9

 
3.3

 
n/m
 
Gain on sale of CyrusOne equity method investment
 
(117.7
)
 
—

 
(117.7
)
 
n/m
 
(412.9
)
 
(192.8
)
 
(220.1
)
 
n/m
 
Other expense (income), net
 
0.4

 
—

 
0.4

 
n/m
 
0.8

 
(1.2
)
 
2.0

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes
 
123.4

 
(6.3
)
 
129.7

 
n/m
 
406.4

 
205.2

 
201.2

 
98%
 
Income tax expense
 
44.1

 
1.2

 
42.9

 
n/m
 
146.1

 
83.1

 
63.0

 
76%
 
Income (loss) from continuing operations
 
79.3

 
(7.5
)
 
86.8

 
n/m
 
260.3

 
122.1

 
138.2

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
 
1.0

 
(19.8
)
 
20.8

 
n/m
 
60.8

 
(28.2
)
 
89.0

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
80.3

 
(27.3
)
 
107.6

 
n/m
 
321.1

 
93.9

 
227.2

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
 
2.6

 
2.6

 
—

 
0%
 
7.8

 
7.8

 
—

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) applicable to common shareowners
 
$
77.7

 
$
(29.9
)
 
$
107.6

 
n/m
 
$
313.3

 
$
86.1

 
$
227.2

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net earnings (loss) per common share
 


 

 
 
 
 
 


 


 
 
 
 
 
 
 
Earnings (loss) from continuing operations
 
$
0.37

 
$
(0.05
)
 
 
 
 
 
$
1.21

 
$
0.55

 
 
 
 
 
 
 
Earnings (loss) from discontinued operations
 
—

 
(0.09
)
 
 
 
 
 
0.29

 
(0.14
)
 
 
 
 
 
Basic net earnings (loss) per common share
 
$
0.37

 
$
(0.14
)
 
 
 
 
 
$
1.50

 
$
0.41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net earnings (loss) per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from continuing operations
 
$
0.37

 
$
(0.05
)
 
 
 
 
 
$
1.20

 
$
0.55

 
 
 
 
 
 
 
Earnings (loss) from discontinued operations
 
—

 
(0.09
)
 
 
 
 
 
0.29

 
(0.14
)
 
 
 
 
 
Diluted net earnings (loss) per common share
 
$
0.37

 
$
(0.14
)
 
 
 
 
 
$
1.49

 
$
0.41

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

 
208.7

 
 
 
 
 
209.5

 
208.4

 
 
 
 
 
 
 - Diluted
 
210.2

 
208.7

 
 
 
 
 
210.1

 
209.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Statements by Segment
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
 
 
 
September 30,
 
Change
 
September 30,
 
Change
 
 
 
 
2015

2014
 
$
 
%
 
2015
 
2014
 
$
 
%
 
Entertainment and Communications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
86.7

 
$
84.1

 
$
2.6

 
3%
 
$
258.6

 
$
251.3

 
$
7.3

 
3%
 
 
Voice - local service
 
43.9

 
49.6

 
(5.7
)
 
(11)%
 
136.0

 
154.6

 
(18.6
)
 
(12)%
 
 
Long distance and VoIP
 
27.5

 
26.9

 
0.6

 
2%
 
82.2

 
80.6

 
1.6

 
2%
 
 
Entertainment
 
25.0

 
19.5

 
5.5

 
28%
 
69.5

 
54.9

 
14.6

 
27%
 
 
Other
 
2.3

 
3.9

 
(1.6
)
 
(41)%
 
9.6

 
10.9

 
(1.3
)
 
(12)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
185.4

 
184.0

 
1.4

 
1%
 
555.9

 
552.3

 
3.6

 
1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
83.9

 
76.8

 
7.1

 
9%
 
245.5

 
221.4

 
24.1

 
11%
 
 
Selling, general and administrative
 
38.5

 
36.2

 
2.3

 
6%
 
113.3

 
101.3

 
12.0

 
12%
 
 
Depreciation and amortization
 
32.6

 
29.3

 
3.3

 
11%
 
93.1

 
85.6

 
7.5

 
9%
 
 
Other*
 
—

 
(1.3
)
 
1.3

 
n/m
 
2.2

 
(0.4
)
 
2.6

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
155.0

 
141.0

 
14.0

 
10%
 
454.1

 
407.9

 
46.2

 
11%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
30.4

 
$
43.0

 
$
(12.6
)
 
(29)%
 
$
101.8

 
$
144.4

 
$
(42.6
)
 
(30)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IT Services and Hardware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Telecom and IT equipment distribution
 
$
69.3

 
$
83.2

 
$
(13.9
)
 
(17)%
 
$
195.0

 
$
217.0

 
$
(22.0
)
 
(10)%
 
 
Managed and professional services
 
47.7

 
36.8

 
10.9

 
30%
 
135.9

 
106.5

 
29.4

 
28%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
117.0

 
120.0

 
(3.0
)
 
(3)%
 
330.9

 
323.5

 
7.4

 
2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
93.1

 
94.4

 
(1.3
)
 
(1)%
 
263.0

 
259.7

 
3.3

 
1%
 
 
Selling, general and administrative
 
13.7

 
14.5

 
(0.8
)
 
(6)%
 
40.4

 
38.9

 
1.5

 
4%
 
 
Depreciation and amortization
 
3.1

 
3.0

 
0.1

 
3%
 
9.2

 
8.6

 
0.6

 
7%
 
 
Other*
 
(1.1
)
 
—

 
(1.1
)
 
n/m
 
2.8

 
—

 
2.8

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
108.8

 
111.9

 
(3.1
)
 
(3)%
 
315.4

 
307.2

 
8.2

 
3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
8.2

 
$
8.1

 
$
0.1

 
1%
 
$
15.5

 
$
16.3

 
$
(0.8
)
 
(5)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Other includes restructuring charges (reversals), (gain) loss on sale or disposal of assets (net) and a curtailment loss.





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
 
 
 
September 30,
 
Change
 
September 30,
 
Change
 
 
 
 
2015
 
2014
 
$
 
%
 
2015
 
2014
 
$
 
%
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
185.4

 
$
184.0

 
$
1.4

 
1%
 
$
555.9

 
$
552.3

 
$
3.6

 
1%
 
 
IT Services and Hardware
 
117.0

 
120.0

 
(3.0
)
 
(3)%
 
330.9

 
323.5

 
7.4

 
2%
 
 
Eliminations
 
(2.6
)
 
(2.6
)
 
—

 
0%
 
(8.3
)
 
(9.2
)
 
0.9

 
(10)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
$
299.8

 
$
301.4

 
$
(1.6
)
 
(1)%
 
$
878.5

 
$
866.6

 
$
11.9

 
1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Services and Products
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
83.9

 
$
76.8

 
$
7.1

 
9%
 
$
245.5

 
$
221.4

 
$
24.1

 
11%
 
 
IT Services and Hardware
 
93.1

 
94.4

 
(1.3
)
 
(1)%
 
263.0

 
259.7

 
3.3

 
1%
 
 
Eliminations
 
(1.4
)
 
(1.7
)
 
0.3

 
(18)%
 
(4.5
)
 
(6.8
)
 
2.3

 
(34)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total cost of services and products
 
$
175.6

 
$
169.5

 
$
6.1

 
4%
 
$
504.0

 
$
474.3

 
$
29.7

 
6%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
38.5

 
$
36.2

 
$
2.3

 
6%
 
$
113.3

 
$
101.3

 
$
12.0

 
12%
 
 
IT Services and Hardware
 
13.7

 
14.5

 
(0.8
)
 
(6)%
 
40.4

 
38.9

 
1.5

 
4%
 
 
Corporate and eliminations
 
0.3

 
2.2

 
(1.9
)
 
(86)%
 
8.0

 
11.5

 
(3.5
)
 
(30)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total selling, general and administrative
 
$
52.5

 
$
52.9

 
$
(0.4
)
 
(1)%
 
$
161.7

 
$
151.7

 
$
10.0

 
7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and Amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
32.6

 
$
29.3

 
$
3.3

 
11%
 
$
93.1

 
$
85.6

 
$
7.5

 
9%
 
 
IT Services and Hardware
 
3.1

 
3.0

 
0.1

 
3%
 
9.2

 
8.6

 
0.6

 
7%
 
 
Corporate
 
0.1

 
—

 
0.1

 
n/m
 
0.1

 
0.2

 
(0.1
)
 
(50)%
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
 
 
 
 
Total depreciation and amortization
 
$
35.8

 
$
32.3

 
$
3.5

 
11%
 
$
102.4

 
$
94.4

 
$
8.0

 
8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other*
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
—

 
$
(1.3
)
 
$
1.3

 
n/m
 
$
2.2

 
$
(0.4
)
 
$
2.6

 
n/m
 
 
IT Services and Hardware
 
(1.1
)
 
—

 
(1.1
)
 
n/m
 
2.8

 
—

 
2.8

 
n/m
 
 
Corporate
 
0.8

 
0.2

 
0.6

 
n/m
 
2.4

 
1.1

 
1.3

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other
 
$
(0.3
)
 
$
(1.1
)
 
$
0.8

 
(73)%
 
$
7.4

 
$
0.7

 
$
6.7

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
30.4

 
$
43.0

 
$
(12.6
)
 
(29)%
 
$
101.8

 
$
144.4

 
$
(42.6
)
 
(30)%
 
 
IT Services and Hardware
 
8.2

 
8.1

 
0.1

 
1%
 
15.5

 
16.3

 
(0.8
)
 
(5)%
 
 
Corporate
 
(2.4
)
 
(3.3
)
 
0.9

 
(27)%
 
(14.3
)
 
(15.2
)
 
0.9

 
(6)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating income
 
$
36.2

 
$
47.8

 
$
(11.6
)
 
(24)%
 
$
103.0

 
$
145.5

 
$
(42.5
)
 
(29)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Other includes restructuring charges (reversals), (gain) loss on sale or disposal of assets (net), curtailment loss and transaction costs.




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Segment Metric Information
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
 
 
2015
 
2015
 
2015
 
2014
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
Residential voice lines
 
 
 
 
 
 
 
 
 
 
 
Legacy voice lines
153.5

 
161.5

 
170.5

 
181.6

 
192.6

 
 
Fioptics voice lines
68.0

 
64.2

 
60.0

 
56.7

 
54.2

 
 
Total residential voice lines
221.5

 
225.7

 
230.5

 
238.3

 
246.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Business voice lines
 
 
 
 
 
 
 
 
 
 
 
Legacy voice lines
220.1

 
227.5

 
233.0

 
238.0

 
242.1

 
 
VoIP lines*
86.9

 
82.4

 
73.9

 
70.0

 
63.3

 
 
Total business voice lines
307.0

 
309.9

 
306.9

 
308.0

 
305.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Total voice lines
528.5

 
535.6

 
537.4

 
546.3

 
552.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Long distance lines
344.6

 
349.7

 
355.5

 
362.8

 
371.4

 
 
 
 
 
 
 
 
 
 
 
 
Internet subscribers
 
 
 
 
 
 
 
 
 
 
 
DSL
137.7

 
142.7

 
149.6

 
156.2

 
163.8

 
 
Fioptics
143.6

 
132.4

 
123.1

 
113.7

 
106.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Total internet subscribers
281.3

 
275.1

 
272.7

 
269.9

 
270.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Fioptics video subscribers
108.8

 
101.5

 
95.8

 
91.4

 
87.8

 
 
 
 
 
 
 
 
 
 
 
 
Fioptics units passed
408.1

 
382.3

 
357.6

 
335.0

 
323.0

 
 
 
 
 
 
 
 
 
 
 
 
 
*
VoIP lines include Fioptics business voice lines.






Cincinnati Bell Inc.
 
 
 
 
Net Debt and Common Shares Outstanding
 
 
 
 
(Unaudited)
 
 
 
 
(Dollars and shares in millions)
 
 
 
 
 
 
 
 
 
 
 
 
September 30,
 
December 31,
 
 
 
2015
 
2014
 
 
 
 
 
 
 
Receivables Facility
$
—

 
$
19.2

 
8 3/4% Senior Subordinated Notes due 2018
—

 
300.0

 
Corporate Credit Agreement - Tranche B Term Loan
529.2

 
533.2

 
8 3/8% Senior Notes due 2020
478.5

 
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
68.4

 
16.1

 
Net unamortized discount
(1.9
)
 
(3.2
)
 
 
 
 
 
 
 
 
Total debt
1,248.7

 
1,701.0

 
 
 
 
 
 
 
Less: Cash and cash equivalents
(25.4
)
 
(57.9
)
 
 
 
 
 
 
 
 
Net debt (as defined by the company)
$
1,223.3

 
$
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 September 30, 2015
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
 
 
 
 
 
 
$
80.3

 
Less:
 
 
 
 
 
 
 
 
 
 
Income from discontinued operations, net of tax
 
 
 
 
 
 
 
1.0

 
Income from continuing operations (GAAP)
 
 
 
 
 
 
 
$
79.3

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
44.1

 
 
Interest expense
 
 
 
 
 
 
 
21.5

 
 
Loss from CyrusOne equity method investment
 
 
 
 
 
 
 
0.8

 
 
Gain on sale of CyrusOne equity method investment
 
 
 
 
 
 
 
(117.7
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
7.8

 
 
Other expense, net
 
 
 
 
 
 
 
0.4

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
30.4

 
$
8.2

 
$
(2.4
)
 
$
36.2

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
32.6

 
3.1

 
0.1

 
35.8

 
 
Restructuring charges
 
—

 
0.3

 
—

 
0.3

 
 
Gain on sale or disposal of assets
 
—

 
(1.4
)
 
—

 
(1.4
)
 
 
Transaction costs
 
—

 
—

 
0.8

 
0.8

 
 
Employee contract termination costs
 
1.3

 
0.2

 
—

 
1.5

 
 
Pension and other retirement plan expenses
 
3.8

 
—

 
0.4

 
4.2

 
Adjusted EBITDA (Non-GAAP)
 
$
68.1

 
$
10.4

 
$
(1.1
)
 
$
77.4

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
37
 %
 
9
 %
 
—

 
26
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2014
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (GAAP)
 
 
 
 
 
 
 
$
(27.3
)
 
Less:
 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of tax
 
 
 
 
 
 
 
(19.8
)
 
Loss from continuing operations (GAAP)
 
 
 
 
 
 
 
$
(7.5
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
1.2

 
 
Interest expense
 
 
 
 
 
 
 
34.7

 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
19.4

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
43.0

 
$
8.1

 
$
(3.3
)
 
$
47.8

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
29.3

 
3.0

 
—

 
32.3

 
 
Restructuring reversals
 
(1.3
)
 
—

 
—

 
(1.3
)
 
 
Transaction costs
 
—

 
—

 
0.2

 
0.2

 
 
Employee contract termination costs
 
—

 
0.6

 
—

 
0.6

 
 
Pension and other retirement plan expenses
 
4.0

 
—

 
0.6

 
4.6

 
Adjusted EBITDA (Non-GAAP)
 
$
75.0

 
$
11.7

 
$
(2.5
)
 
$
84.2

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
41
 %
 
10
 %
 
—

 
28
 %
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
(6.9
)
 
$
(1.3
)
 
$
1.4

 
$
(6.8
)
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
(9
)%
 
(11
)%
 
(56
)%
 
(8
)%




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP)
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
 
 
 
 
 
 
$
321.1

 
Less:
 
 
 
 
 
 
 
 
 
 
Income from discontinued operations, net of tax
 
 
 
 
 
 
 
60.8

 
Income from continuing operations (GAAP)
 
 
 
 
 
 
 
$
260.3

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
146.1

 
 
Interest expense
 
 
 
 
 
 
 
82.2

 
 
Loss from CyrusOne equity method investment
 
 
 
 
 
 
 
5.2

 
 
Gain on sale of CyrusOne equity method investment
 
 
 
 
 
 
 
(412.9
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
21.3

 
 
Other expense, net
 
 
 
 
 
 
 
0.8

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
101.8

 
$
15.5

 
$
(14.3
)
 
$
103.0

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
93.1

 
9.2

 
0.1

 
102.4

 
 
Restructuring charges
 
1.6

 
2.8

 
1.6

 
6.0

 
 
Loss on sale or disposal of assets
 
0.3

 
—

 
—

 
0.3

 
 
Transaction costs
 
—

 
—

 
0.8

 
0.8

 
 
Employee contract termination costs
 
1.3

 
0.2

 
—

 
1.5

 
 
Curtailment loss
 
0.3

 
—

 
—

 
0.3

 
 
Pension and other retirement plan expenses
 
15.4

 
—

 
1.5

 
16.9

 
Adjusted EBITDA (Non-GAAP)
 
$
213.8

 
$
27.7

 
$
(10.3
)
 
$
231.2

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
38
 %
 
8
%
 
—

 
26
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2014
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
Net income (GAAP)
 
 
 
 
 
 
 
$
93.9

 
Less:
 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of tax
 
 
 
 
 
 
 
(28.2
)
 
Income from continuing operations (GAAP)
 
 
 
 
 
 
 
$
122.1

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
83.1

 
 
Interest expense
 
 
 
 
 
 
 
113.0

 
 
Loss from CyrusOne equity method investment
 
 
 
 
 
 
 
1.9

 
 
Gain on sale of CyrusOne equity method investment
 
 
 
 
 
 
 
(192.8
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
19.4

 
 
Other income, net
 
 
 
 
 
 
 
(1.2
)
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
144.4

 
$
16.3

 
$
(15.2
)
 
$
145.5

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
85.6

 
8.6

 
0.2

 
94.4

 
 
Restructuring (reversals) charges
 
(0.2
)
 
—

 
0.1

 
(0.1
)
 
 
(Gain) loss on sale or disposal of assets
 
(0.2
)
 
—

 
0.1

 
(0.1
)
 
 
Transaction costs
 
—

 
—

 
0.9

 
0.9

 
 
Employee contract termination costs
 
—

 
0.6

 
—

 
0.6

 
 
Pension and other retirement plan expenses
 
12.1

 
—

 
1.4

 
13.5

 
Adjusted EBITDA (Non-GAAP)
 
$
241.7

 
$
25.5

 
$
(12.5
)
 
$
254.7

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin
 
44
 %
 
8
%
 
—

 
29
 %
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
(27.9
)
 
$
2.2

 
$
2.2

 
$
(23.5
)
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
(12
)%
 
9
%
 
(18
)%
 
(9
)%




Cincinnati Bell Inc.
 
 
 
 
 
 
 
Consolidated Statements of Cash Flows
 
(Unaudited)
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
62.0

 
$
27.0

 
$
94.7

 
$
120.8

 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(73.2
)
 
(45.6
)
 
(205.7
)
 
(121.1
)
 
 
Dividends received from CyrusOne
4.5

 
6.0

 
19.5

 
22.4

 
 
Proceeds from sale of CyrusOne equity method investment
170.3

 
—

 
596.3

 
355.9

 
 
Proceeds from sale of Wireless spectrum licenses
—

 
194.4

 
—

 
194.4

 
 
Other, net
0.5

 
—

 
0.4

 
(3.7
)
 
 
 
 
 
 
 
 
 
 
 
Cash provided by investing activities
102.1

 
154.8

 
410.5

 
447.9

 
 
 
 
 
 
 
 
 
 
 
 
Net decrease in corporate credit and receivables facilities with initial maturities less than 90 days
(2.6
)
 
(2.4
)
 
(19.2
)
 
(33.8
)
 
 
Repayment of debt
(148.4
)
 
(342.3
)
 
(509.8
)
 
(350.6
)
 
 
Debt issuance costs
—

 
—

 
(0.4
)
 
—

 
 
Dividends paid on preferred stock
(2.6
)
 
(2.6
)
 
(7.8
)
 
(7.8
)
 
 
Proceeds from exercise of options and warrants
—

 
—

 
—

 
1.2

 
 
Other, net
0.1

 
(0.2
)
 
(0.5
)
 
(0.8
)
 
 
 
 
 
 
 
 
 
 
 
Cash used in financing activities
(153.5
)
 
(347.5
)
 
(537.7
)
 
(391.8
)
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
10.6

 
(165.7
)
 
(32.5
)
 
176.9

 
Cash and cash equivalents at beginning of period
14.8

 
347.2

 
57.9

 
4.6

 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at end of period
$
25.4

 
$
181.5

 
$
25.4

 
$
181.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP Cash Flow to
 
 
 
 
 
 
 
 
 
Free Cash Flow (as defined by the company)
 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
$
10.6

 
$
(165.7
)
 
$
(32.5
)
 
$
176.9

 
Adjustments:
 
 
 
 
 
 
 
 
 
Net decrease in corporate credit and receivables
facilities with initial maturities less than 90 days
2.6

 
2.4

 
19.2

 
33.8

 
 
Repayment of debt
148.4

 
342.3

 
509.8

 
350.6

 
 
Discontinued operations*
6.1

 
(205.2
)
 
24.5

 
(222.3
)
 
 
Decommissioning of wireless towers
1.2

 
—

 
2.7

 
—

 
 
Debt issuance costs
—

 
—

 
0.4

 
—

 
 
Transaction costs
0.8

 
0.2

 
0.8

 
0.9

 
 
Proceeds from sale of CyrusOne equity method investment
(170.3
)
 
—

 
(596.3
)
 
(355.9
)
 
 
 
 
 
 
 
 
 
 
 
 
   Free cash flow
(0.6
)
 
(26.0
)
 
(71.4
)
 
(16.0
)
 
 
 
 
 
 
 
 
 
 
 
Income tax payments
$
2.8

 
$
4.6

 
$
3.7

 
$
4.9

 
 
 
 
 
 
 
 
 
 
 
*For the quarter ended September 30, 2015 and 2014, our wireless business generated free cash flow of ($6.1) million and $10.8 million, respectively. For the nine months ended September 30, 2015 and 2014, our wireless business generated free cash flow of ($24.5) million and $27.9 million, respectively. The three months and nine months ended September 30, 2014 also included $194.4 million of proceeds from the sale of wireless spectrum licenses. 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 September 30, 2014
$
(26.0
)
 
 
 
 
Decrease in Adjusted EBITDA
(6.8
)
 
Increase in capital expenditures from continuing operations
(27.9
)
 
Decrease in interest payments
21.8

 
Decrease in pension and postretirement payments and contributions
7.8

 
Change in working capital and other
30.5

 
 
 
 
Free Cash Flow for the three months ended September 30, 2015
$
(0.6
)
 
 
 
 
Free Cash Flow for the nine months ended September 30, 2014
$
(16.0
)
 
 
 
 
Decrease in Adjusted EBITDA
(23.5
)
 
Increase in capital expenditures from continuing operations
(91.1
)
 
Decrease in interest payments
35.0

 
Decrease in pension and postretirement payments and contributions
8.6

 
Change in working capital and other
15.6

 
 
 
 
Free Cash Flow for the nine months ended September 30, 2015
$
(71.4
)
 
 
 




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Capital Expenditures
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Sep. 30, 2015
 
Jun. 30, 2015
 
Mar. 31, 2015
 
Dec. 31, 2014
 
Sep. 30, 2014
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
$
69.4

 
$
70.1

 
$
54.0

 
$
57.6

 
$
41.8

IT Services and Hardware
3.8

 
4.4

 
3.9

 
3.4

 
3.5

Corporate
—

 
0.1

 
—

 
0.2

 
—

Total capital expenditures from continuing operations
$
73.2

 
$
74.6

 
$
57.9

 
$
61.2

 
$
45.3

 
 
 
 
 
 
 
 
 
 
Discontinued operations
$
—

 
$
—

 
$
—

 
$
—

 
$
0.3

Total capital expenditures
$
73.2

 
$
74.6

 
$
57.9

 
$
61.2

 
$
45.6

 
 
 
 
 
 
 
 
 
 




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
 
 
 
September 30, 2015
 
 
 
 
September 30, 2015
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
299.8

 
$
—

 
$
299.8

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
175.6

 
—

 
175.6

 
 
Selling, general and administrative
52.5

 
(1.5
)
[A]
51.0

 
 
Depreciation and amortization
35.8

 
—

 
35.8

 
 
Restructuring charges
0.3

 
(0.3
)
[B]
—

 
 
Gain on sale or disposal of assets, net
(1.4
)
 
1.4

[C]
—

 
 
Transaction costs
0.8

 
(0.8
)
[D]
—

 
 
 
Operating income
36.2

 
1.2

 
37.4

 
 
 
 
 
 
 
 
 
 
Interest expense
21.5

 
—

 
21.5

 
Loss on extinguishment of debt
7.8

 
(7.8
)
[E]
—

 
Loss from CyrusOne equity method investment
0.8

 
—

 
0.8

 
Gain on sale of CyrusOne equity method investment
(117.7
)
 
117.7

[F]
—

 
Other expense, net
0.4

 
—

 
0.4

 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
123.4

 
(108.7
)
 
14.7

 
Income tax expense
44.1

 
(39.1
)
 
5.0

 
Income from continuing operations
79.3

 
(69.6
)
 
9.7

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations, net of tax
1.0

 
(1.0
)
 
—

 
 
 
 
 
 
 
 
 
 
Net income
80.3

 
(70.6
)
 
9.7

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
2.6

 
—

 
2.6

 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
$
77.7

 
$
(70.6
)
 
$
7.1

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
210.2

 
210.2

 
210.2

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share*
$
0.37

 
$
(0.34
)
 
$
0.03

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Employee contract termination costs.
 
 
 
 
 
 
 
 
 
B
Restructuring charges consist of employee severance.
 
 
 
 
 
 
 
 
 
C
Gain on the sale of our cyber-security assets, previously recorded as a loss pending financing being secured by the acquiring company.
 
 
 
 
 
 
 
 
 
D
Transaction costs associated with exploring opportunities to increase the scale of our IT Services and Hardware segment.
 
 
E
Loss on extinguishment of debt related to the redemption of $137.6 million of the outstanding 8 3/8 % Senior Notes due 2020 at an average redemption rate of 105.242%.
 
 
F
Gain on sale of CyrusOne equity method investment.
 
 
*
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
 
 
 
September 30, 2014
 
 
 
 
September 30, 2014
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
301.4

 
$
—

 
$
301.4

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
169.5

 
—

 
169.5

 
 
Selling, general and administrative
52.9

 
(0.6
)
[A]
52.3

 
 
Depreciation and amortization
32.3

 
—

 
32.3

 
 
Restructuring reversals
(1.3
)
 
1.3

[B]
—

 
 
Transaction costs
0.2

 
(0.2
)
[C]
—

 
 
 
Operating income
47.8

 
(0.5
)
 
47.3

 
 
 
 
 
 
 
 
 
 
Interest expense
34.7

 
—

 
34.7

 
Loss on extinguishment of debt
19.4

 
(19.4
)
[D]
—

 
 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before income taxes
(6.3
)
 
18.9

 
12.6

 
Income tax expense
1.2

 
6.8

 
8.0

 
(Loss) income from continuing operations
(7.5
)
 
12.1

 
4.6

 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of tax
(19.8
)
 
19.8

 
—

 
 
 
 
 
 
 
 
 
 
Net (loss) income
(27.3
)
 
31.9

 
4.6

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
2.6

 
—

 
2.6

 
 
 
 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners
$
(29.9
)
 
$
31.9

 
$
2.0

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
208.7

 
209.7

 
209.7

 
 
 
 
 
 
 
 
 
 
Diluted (loss) earnings per common share*
$
(0.14
)
 
$
0.15

 
$
0.01

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Employee contract termination costs associated with integrating IT Services and Hardware segment with Entertainment and Communications business markets.

 
 
 
 
 
 
 
 
 
B
Restructuring reversals were associated with a lease abandonment reserve for vacant floors that were reoccupied.
 
 
C
Transaction costs were incurred for legal fees associated with the sale of our wireless assets.
 
 
 
 
 
 
 
 
 
D
Loss on extinguishment of debt related to the redemption of $325.0 million 8 3/4% Senior Subordinated Notes due 2018 on August 8, 2014 at a redemption rate of 104.375%.
 
 
 
 
 
 
 
 
 
*
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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine
 
 
 
 
Nine
 
 
 
Months Ended
 
 
 
 
Months Ended
 
 
 
September 30, 2015
 
 
 
 
September 30, 2015
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
878.5

 
$
—

 
$
878.5

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
504.0

 
—

 
504.0

 
 
Selling, general and administrative
161.7

 
(5.3
)
[A]
156.4

 
 
Depreciation and amortization
102.4

 
—

 
102.4

 
 
Restructuring charges
6.0

 
(6.0
)
[B]
—

 
 
Loss on sale or disposal of assets, net
0.3

 
(0.3
)
[C]
—

 
 
Curtailment loss
0.3

 
(0.3
)
[D]
—

 
 
Transaction costs
0.8

 
(0.8
)
[E]
—

 
 
 
Operating income
103.0

 
12.7

 
115.7

 
 
 
 
 
 
 
 
 
 
Interest expense
82.2

 
—

 
82.2

 
Loss on extinguishment of debt
21.3

 
(21.3
)
[F]
—

 
Loss from CyrusOne equity method investment
5.2

 
—

 
5.2

 
Gain on sale of CyrusOne equity method investment
(412.9
)
 
412.9

[G]
—

 
Other expense, net
0.8

 
—

 
0.8

 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
406.4

 
(378.9
)
 
27.5

 
Income tax expense
146.1

 
(136.4
)
 
9.7

 
Income from continuing operations
260.3

 
(242.5
)
 
17.8

 
 
 
 
 
 
 
 
 
 
Income from discontinued operations, net of tax
60.8

 
(60.8
)
 
—

 
 
 
 
 
 
 
 
 
 
Net income
321.1

 
(303.3
)
 
17.8

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
7.8

 
—

 
7.8

 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
$
313.3

 
$
(303.3
)
 
$
10.0

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
210.1

 
210.1

 
210.1

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share*
$
1.49

 
$
(1.44
)
 
$
0.05

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Pension related charges of $3.8 million associated with non-qualified excess plan and $1.5 million of employee contract termination costs.
 
 
 
 
 
 
 
 
 
B
Restructuring charges consist of employee severance, project costs to identify opportunities to further integrate the business markets within our Entertainment and Communications segment and IT Services and Hardware segment, and lease abandonment costs.
 
 
 
 
 
 
 
 
 
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
Transaction costs associated with exploring opportunities to increase the scale of our IT Services and Hardware segment.
 
 
 
 
 
 
 
 
 
F
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 and $137.6 million of the outstanding 8 3/8% Senior Notes due 2020 during the second and third quarter, respectively, at an average redemption rate of 106.450% in the second quarter and 105.242% in the third quarter.
 
 
 
 
 
 
 
 
 
G
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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine
 
 
 
 
Nine
 
 
 
Months Ended
 
 
 
 
Months Ended
 
 
 
September 30, 2014
 
 
 
 
September 30, 2014
 
 
 
Before Special Items
 
 
 
 
(GAAP)
 
Special Items
 
(Non-GAAP)
 
 
 
 
 
 
 
 
 
 
Revenue
$
866.6

 
$
—

 
$
866.6

 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
Cost of services and products
474.3

 
—

 
474.3

 
 
Selling, general and administrative
151.7

 
(0.6
)
[A]
151.1

 
 
Depreciation and amortization
94.4

 
—

 
94.4

 
 
Restructuring reversals
(0.1
)
 
0.1

[B]
—

 
 
Gain on sale or disposal of assets, net
(0.1
)
 
0.1

[C]
—

 
 
Transaction costs
0.9

 
(0.9
)
[D]
—

 
 
 
Operating income
145.5

 
1.3

 
146.8

 
 
 
 
 
 
 
 
 
 
Interest expense
113.0

 
—

 
113.0

 
Loss on extinguishment of debt
19.4

 
(19.4
)
[E]
—

 
Loss from CyrusOne equity method investment
1.9

 
—

 
1.9

 
Gain on sale of CyrusOne equity method investment
(192.8
)
 
192.8

[F]
—

 
Other income, net
(1.2
)
 
—

 
(1.2
)
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
205.2

 
(172.1
)
 
33.1

 
Income tax expense
83.1

 
(62.0
)
 
21.1

 
Income from continuing operations
122.1

 
(110.1
)
 
12.0

 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of tax
(28.2
)
 
28.2

 
—

 
 
 
 
 
 
 
 
 
 
Net income
93.9

 
(81.9
)
 
12.0

 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
7.8

 
—

 
7.8

 
 
 
 
 
 
 
 
 
 
Net income applicable to common shareowners
$
86.1

 
$
(81.9
)
 
$
4.2

 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares
209.4

 
209.4

 
209.4

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share*
$
0.41

 
$
(0.39
)
 
$
0.02

 
 
 
 
 
 
 
 
 
 
Normalized results have been adjusted for the following (pretax adjustments are tax effected at 36%):
 
 
 
 
 
 
 
 
 
A
Employee contract termination costs associated with integrating IT Services and Hardware segment with Entertainment and Communications business markets.
 
 
 
 
 
 
 
 
 
B
Restructuring reversals of $1.3 million associated with a lease abandonment reserve for vacant floors that were reoccupied offset by $1.2 million of severance costs associated with outsourcing a portion of our IT function.
 
 
C
Gain on sale of wireline copper cabling.
 
 
 
 
 
 
 
 
 
D
Transaction costs were incurred for legal fees associated with the sale of our wireless assets.
 
 
 
 
 
 
 
 
 
E
Loss on extinguishment of debt related to the redemption of $325.0 million 8 3/4% Senior Subordinated Notes due 2018 on August 8, 2014 at a redemption rate of 104.375%.

 
 
 
 
 
 
 
 
 
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.
 
 
 
 
 
Reconciliation of Operating Income (GAAP) Guidance to Adjusted EBITDA (Non-GAAP) Guidance
 
(Unaudited)
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  2015 Operating Income (GAAP) Guidance
 
$
130

 
 
 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Depreciation and amortization
 
140

 
 
   Restructuring
 
6

 
 
   Pension and other retirement plan expenses
 
21

 
 
 
 
 
 
 
 
 
 
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 Third Quarter 2015 Results November 4, 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

 
Strategic Revenue Growth  Revenue from strategic consumer and business products was $138 million, up 22% from a year ago  Fioptics revenue totaled $49 million, up 34% from a year ago  Strategic managed and professional services revenue increased 31% compared to a year ago, totaling $46 million Impressive Metrics  Record high 7,300 Fioptics video and 11,200 Fioptics internet subscriber additions  Fioptics video subscribers totaled 108,800 and Fioptics internet subscribers equaled 143,600  Total internet subscribers reached a record-high 281,300 as of the end of the quarter, up 10,800 compared to a year ago Third Quarter 2015 Highlights 6

 
Integration Strategic Legacy Intercompany Backhaul $34 $45 $84 $70 Q3 2014 Q3 2015 $40 $44 $58 $56 Q3 2014 Q3 2015 $74 $89 $58 $56 $85 $71 Q3 2014 Q3 2015 Business Market Update Total Business Market Revenue $221 $216  Revenue from business customers accounts for approximately 70% of consolidated revenue Entertainment & Communications Revenue $103 $101 IT Services & Hardware Revenue $118 $115 Net of intercompany eliminations Y/Y (16)% (3)% 20% Y/Y Y/Y (3)% 10% (17)% 32% 7 ($ in millions) [2] [1] [1] [2] [1] Revenue for backhaul services provided to our discontinued wireless operations totaled $4 million in Q3 2014 Entertainment & Communications Integration revenue totaled $1 million in Q3 2014 and Q3 2015 [3] [1] [3]

 
$37 $49 $42 $34 Q3 2014 Q3 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. Q3 2015 ARPUs are as follows: ‒ Video – $79, Internet – $44, Voice – $30  Total video churn was 3.0% for the quarter ‒ Single-family churn was 2.4% ‒ Apartment churn was 5.6% 8  Fioptics revenue for the quarter totaled $49 million, up 34% compared to the prior year  Fioptics is available to 408k addresses, or 50% of Greater Cincinnati ‒ Passed 25,800 new addresses in Q3 2015 $81 $84 Entertainment & Communications Revenue Y/Y (19)% 32% ($ in millions) Total Fioptics Subscribers (in thousands) [1] Fioptics revenue includes $3 million in Q3 2015 and $2 million in Q3 2014 from business customers [1] [2] Integration revenue totaled $2 million in Q3 2014 and $1 million in Q3 2015 [2] 88 109 107 144 58 73 Q3 2014 Q3 2015 Video Subs Internet Subs Voice Subs

 
Leigh Fox Chief Financial Officer 9

 
$77 $300 ($ in millions) Third Quarter Financial Summary Entertainment & Communications IT Services & Hardware Corporate Eliminations 10 Revenue $301 $84 Adjusted EBITDA  Total revenue of $300 million in the third quarter of 2015, up $2 million year-over-year  Strong third quarter Adjusted EBITDA of $77 million  Income from continuing operations totaled $79 million – including the $118 million gain on the sale of CyrusOne partnership units and an $8 million loss on extinguishment of debt [1] [1] Excluding $4 million of backhaul services provided to our former wireless business, which discontinued operations effective March 31, 2015

 
($ in millions) Entertainment & Communications Revenue and Adjusted EBITDA Integration Strategic Legacy $185 11 Integration revenue totaled $3 million in Q3 2014 and $2 million in Q3 2015  Strategic revenue growth in Q3 2015 offset decline from legacy products  Adjusted EBITDA Margin for Q3 2015 was 37% - consistent with expectations  7,300 video and 6,200 total internet subscriber additions in Q3 2015  Voice line loss was 4% – slightly improved from the prior year ‒ Business lines increased 1% ‒ Residential line decreased 10% Intercompany Backhaul Revenue for backhaul services provided to our discontinued wireless operations totaled $4 million in Q3 2014 [1] [2] [1] [2] $184

 
($ in millions) IT Services & Hardware Revenue and Adjusted EBITDA  Revenue of $117 million for Q3 2015, down 3% from Q3 2014 ‒ Strategic Managed and Professional Services increased 31% compared to the prior year ‒ Telecom & IT Equipment revenue of $69 million for Q3 2015 was down from the prior year due to the cyclical nature of these sales  Operating income and Adjusted EBITDA for the quarter totaled $8 million and $10 million, respectively  Adjusted EBITDA margin was 9%, down slightly from a year ago. Integration Revenue Strategic Revenue $120 $117 12

 
Capital Structure Liquidity Leverage Ratio 13 Q3 2015 Cash and Cash Equivalents 25$ Corporate Credit Facility 175 Receivables Facility 103 Liquidity 303  Repaid $138 million of our outstanding 8.375% Senior Notes due 2020 in third quarter of 2015 at an average redemption rate of 105%  Current leverage as adjusted for our remaining 11 percent investment in CyrusOne is well within a reasonable range [1] 2015 leverage calculated based on Adjusted EBITDA guidance [1] 4.1x 3.1x 1.0 2.0 3.0 4.0 5.0 6.0 2011 2012 2013 2014 Sept 2015 Leverage Leverage Adj. for CONE Investment

 
Q3 2015 YTD 2015 Adjusted EBITDA 77$ 231 Interest Payments (11) (76) Capital Expenditures (73) (206) Pension and OPEB Payments (3) (18) Dividends from CyrusOne 5 20 Working Capital and Other 4 (22) Free Cash Flow (1)$ (71)$ Q3 2015 Free Cash Flow and Capital Expenditures 14 ($ in millions) Free Cash Flow Capital Expenditur s Certain 2015 Free Cash Flow Items  Interest payments ~ $105 million  Pension and OPEB payments ~ $20 million  CyrusOne dividends ~ $22 million  Capital Expenditures: $270 - $280 million Q3 2015 YTD 2015 Construction 22$ 59 Installation 14 35 Value added 8 33 Total Fioptics 44$ 127 Other Strategic 14 42 Total Strategic Investment 58$ 169 Maintenance 15 37 73$ 206

 
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 299.8$ 301.4$ 878.5$ 866.6$ Costs and expenses Cost of services and products 175.6 169.5 504.0 474.3 Selling, general and administrative 52.5 52.9 161.7 151.7 Depreciation and amortization 35.8 32.3 102.4 94.4 Restructuring charges (reversals) 0.3 (1.3) 6.0 (0.1) (Gain) loss on sale or disposal of assets, net (1.4) - 0.3 (0.1) Curtailment Loss - - 0.3 - Transaction costs 0.8 0.2 0.8 0.9 Operating income 36.2 47.8 103.0 145.5 Interest expense 21.5 34.7 82.2 113.0 Loss on extinguishment of debt 7.8 19.4 21.3 19.4 Loss from CyrusOne equity method investment 0.8 - 5.2 1.9 Gain on sale of CyrusOne equity method investment (117.7) - (412.9) (192.8) Other expense (income), net 0.4 - 0.8 (1.2) Income (loss) from continuing operations before income taxes 123.4 (6.3) 406.4 205.2 Income tax expense 44.1 1.2 146.1 83.1 Income (loss) from continuing operations 79.3 (7.5) 260.3 122.1 Income (loss) from discontinued operations, net of tax 1.0 (19.8) 60.8 (28.2) Net income (loss) 80.3 (27.3) 321.1 93.9 Preferred stock dividends 2.6 2.6 7.8 7.8 Net income (loss) applicable to common shareowners 77.7$ (29.9)$ 313.3$ 86.1$ Basic net earnings (loss) per common share Earnings (loss) from continuing operations 0.37$ (0.05)$ 1.21$ 0.55$ Earnings (loss) from discontinued operations - (0.09) 0.29 (0.14) Basic net earnings (loss) per common share 0.37$ (0.14)$ 1.50$ 0.41$ Diluted net earnings (loss) per common share Earnings (loss) from continuing operations 0.37$ (0.05)$ 1.20$ 0.55$ Earnings (loss) from discontinued operations - (0.09) 0.29 (0.14) Diluted net earnings (loss) per common share 0.37$ (0.14)$ 1.49$ 0.41$ Three Months Ended September 30, Nine Months Ended September 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 44.9$ -$ Voice - local service 6.0 - Long distance and VoIP 16.4 - Entertainment 25.0 - Other 1.2 - Managed & Professional Services - 46.0 Hardware - - Total Strategic 93.5 46.0 139.5 (1.9) 137.6 Legacy Data 41.8$ -$ Voice - local service 36.4 - Long distance and VoIP 10.8 - Entertainment - - Other 1.1 - Managed & Professional Services - - Hardware - - Total Legacy 90.1 - 90.1 (0.2) 89.9 Integration Data -$ -$ Voice - local service 1.5 - Long distance and VoIP 0.3 - Entertainment - - Other - - Managed & Professional Services - 1.7 Hardware - 69.3 Total Integration 1.8 71.0 72.8 (0.5) 72.3 Total Revenue 185.4$ 117.0$ 302.4$ (2.6)$ 299.8$ Eliminations 0.2 2.4 2.6 185.2$ 114.6$ 299.8$ Q3 2015 Revenue – MD&A Q3 2015 Strategic, Legacy and Integration 19 ($ in millions)

 
20 Revenue – MD&A Q3 2014 Strategic, Legacy and Integration ($ in millions) Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data 38.8$ -$ Voice - local service 5.3 - Long distance and VoIP 14.8 - Entertainment 19.3 - Other 1.1 - Managed & Professional Services - 35.0 Hardware - - Total Strategic 79.3 35.0 114.3 (1.5) 112.8 Legacy Data 45.3$ -$ Voice - local service 42.6 - Long distance and VoIP 11.6 - Entertainment - - Other 2.6 - Managed & Professional Services - - Hardware - - Total Legacy 102.1 - 102.1 - 102.1 Integration Data -$ -$ Voice - local service 1.7 - Long distance and VoIP 0.5 - Entertainment 0.2 - Other 0.2 - Managed & Professional Services - 1.8 Hardware - 83.2 Total Integration 2.6 85.0 87.6 (1.1) 86.5 Total Revenue 184.0$ 120.0$ 304.0$ (2.6)$ 301.4$ Eliminations 0.3 2.3 2.6 183.7$ 117.7$ 301.4$ Q3 2014

 
Entertainment and Communications IT Services and Hardware Total Eliminations Total Strategic Data 129.8$ -$ Voice - local service 17.3 - Long distance and VoIP 48.5 - Entertainment 69.5 - Other 2.4 - Managed & Professional Services - 131.3 Hardware - - Total Strategic 267.5 131.3 398.8 (6.2) 392.6 Legacy Data 128.8$ -$ Voice - local service 114.1 - Long distance and VoIP 32.4 - Entertainment - - Other 4.7 - Managed & Professional Services - - Hardware - - Total Legacy 280.0 - 280.0 (0.5) 279.5 Integration Data -$ -$ Voice - local service 4.6 - Long distance and VoIP 1.3 - Entertainment - - Other 2.5 - Managed & Professional Services - 4.6 Hardware - 195.0 Total Integration 8.4 199.6 208.0 (1.6) 206.4 Total Revenue 555.9$ 330.9$ 886.8$ (8.3)$ 878.5$ Eliminations 0.9 7.4 8.3 555.0$ 323.5$ 878.5$ YTD Q3 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 111.4$ -$ Voice - local service 15.5 - Long distance and VoIP 43.0 - Entertainment 54.5 - Other 3.6 - Managed & Professional Services - 101.7 Hardware - - Total Strategic 228.0 101.7 329.7 (5.7) 324.0 Legacy Data 139.9$ -$ Voice - local service 134.0 - Long distance and VoIP 35.9 - Entertainment - - Other 6.7 - Managed & Professional Services - - Hardware - - Total Legacy 316.5 - 316.5 - 316.5 Integration Data -$ -$ Voice - local service 5.1 - Long distance and VoIP 1.7 - Entertainment 0.4 - Other 0.6 - Managed & Professional Services - 4.8 Hardware - 217.0 Total Integration 7.8 221.8 229.6 (3.5) 226.1 Total Revenue 552.3$ 323.5$ 875.8$ (9.2)$ 866.6$ Eliminations 0.8 8.4 9.2 551.5$ 315.1$ 866.6$ YTD Q3 2014

 

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