Broadwing Reports Second Quarter Financial Results; Operating Income, Cash Flow, EPS Show Improvement.Business Editors/High-Tech WritersCINCINNATI--(BUSINESS WIRE)--July 25, 2002 Broadwing Broadwing can mean:-
See: New York Stock Exchange :BRW BRW Business Review Weekly (business magazine; Melbourne, Victoria, Australia) BRW Business Report Writer BRW Barrow, AK, USA - Barrow (Airport Code) BRW Business Requirement Worksheet ) today announced financial results for the second quarter. For the period, revenue of $553 million represented a 3 percent increase over the first quarter of 2002, and a 6 percent decline from the same period a year ago. Earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) increased 4 percent year over year to $158 million. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. more than doubled to $36 million from $16 million in the second quarter of 2001 and improved $27 million over the first quarter of 2002. During the quarter, the Company reported a net loss of $0.10 per share, which represents a $0.04 per share improvement over a $0.14 per share loss in the second quarter of 2001. During the quarter, the Company borrowed from its credit facility a net $27 million, down from $75 million of net borrowings during the same period in the prior year. Both figures include cash used for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of $12 million and $5 million respectively. "I am pleased that even in this challenging environment, our focus on operating income and cash flow drove measurable improvement in the second quarter," said Rick Ellenberger, Broadwing Inc. Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our Cincinnati Bell Cincinnati Bell is the dominant telephone company for Cincinnati, Ohio and its nearby suburbs in Ohio, Indiana and Kentucky. The parent company is named Cincinnati Bell Inc. businesses remain strong and steady, and Broadwing Communications continues to grow its share of high-value enterprise customers on a national basis." Special Items A carrier customer in bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: a service agreement with Broadwing Communications, releasing the Company from the obligation to provide service. As a result, the Company recognized a $17.5 million non-recurring, non-cash benefit in both revenue and EBITDA. During the quarter, a large construction contract at Broadwing Communications was terminated. Since the contract is in dispute, $13 million was recorded as expense to recognize costs incurred in the quarter, which include shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down costs. Additionally, Broadwing Communications has deferred cash payment of the quarterly dividend, due August 15, 2002, on its Broadwing Communications subsidiary 12 1/2 percent preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. , in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the terms of the security. The dividend will be accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. and the Company will conserve approximately $12.4 million of cash in the third quarter. As required, the Company adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142 effective January January: see month. 1, 2002. As a result of completing the Company's goodwill analysis in the second quarter, the statement of operations See Income statement. reflects a $2.0 billion non-cash, after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge, effective January 1, 2002, associated with the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of goodwill related to the acquisition of its broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). business. In addition the Company stopped amortizing goodwill. This change will account for a decrease in amortization of $22 million in each quarter of 2002. The company continues to be in compliance with all of its bank debt covenant agreements. Cincinnati-Based Operations Broadwing's Cincinnati-based businesses continued to drive revenue growth and margin expansion by leveraging demand for service bundles, offering award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" customer service, and focusing on expense management. On a consolidated basis, the Cincinnati Bell businesses reported revenue of $294 million and EBITDA of $137 million; growth of 4 percent and 15 percent respectively over the same period in 2001. Operating income improved to $92.5 million, up 20% from $76.8 million in the second quarter of 2001. Selling, general, and administrative (SG&A) expenses were 16 percent of revenue, an improvement of 5 points over the same period in 2001. Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for the Cincinnati Bell companies in the second quarter was $30 million, a 34 percent reduction versus the same quarter a year ago. Local Communications Services Broadwing's local-exchange company, Cincinnati Bell Telephone, delivered another quarter of stable financial performance. Revenue grew by 1 percent to $210 million and EBITDA expanded 4 percent to an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high of $109 million, with a record EBITDA margin of 52 percent. Operating income grew 3 percent to $73 million. Revenue growth continued to be driven by sales of data, voice, and IP services on Broadwing's national network and aggressive marketing of bundled services. For example, Complete Connections, Cincinnati Cincinnati (sĭnsənăt`ē, –năt`ə), city (1990 pop. 364,040), seat of Hamilton co., extreme SW Ohio, on the Ohio River opposite Newport and Covington, Ky.; inc. as a city 1819. Bell's bundled services product, enjoyed a record quarter for sales, adding nearly 23,000 net new subscribers. Cincinnati Bell is one of the industry leaders in the penetration of value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. services, with 38 percent penetration. Cincinnati Bell Telephone also completed the negotiation of a tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. contract (scheduled for a ratification The confirmation or adoption of an act that has already been performed. A principal can, for example, ratify something that has been done on his or her behalf by another individual who assumed the authority to act in the capacity of an agent. vote July July: see month. 25th) with its CWA CWA Clean Water Act (33 USC) CWA Communications Workers of America CWA Concerned Women for America CWA CEN Workshop Agreement (European pre-normative document) CWA County Warning Area CWA Clean Water Action represented workers that extends through May 2005. Wireless Services Cincinnati Bell Wireless continued its focus on maximizing its financial profitability. Revenue of $68 million represented an 8 percent increase over the same period in 2001. EBITDA improved 72 percent from a year ago to $26 million and CBW's EBITDA margin of 39 percent represented an improvement of over 14 points over the comparable quarter in 2001. Operating income doubled over the same period last year to $18 million. Capital spending was $13 million and the operation produced net income of $8 million, up 20 percent over the first quarter of 2002. In the quarter, Cincinnati Bell Wireless increased postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. to $60.51, while churn churn: see butter. remained low at under 1.6 percent. In the period, CBW cbw - Crypt Breakers Workbench recorded total net subscriber adds of 6,300. Other Operations In total, Other Communications Services businesses increased revenue 6 percent over the second quarter of 2001 to $20 million, while EBITDA improved to $2 million from a loss of $1 million during the same period. Operating income improved to $1.5 million, as compared to a loss of $1.7 million in the second quarter of 2001. Cincinnati Bell Any Distance, the company's long distance offering, repeated its 2001 customer service success by winning the prestigious JD Power and Associates Award for Long Distance Customer Satisfaction Among Mainstream Users for the second straight year. Cincinnati market share for this offering remained unchanged over the prior quarter at 68 percent in the residential market and increased almost two points over the first quarter to 41 percent in the business market. National Communications Services Broadwing Communications, the company's national communications services business, recorded revenue of $278 million, a decline of 13 percent from the second quarter 2001. EBITDA was $24 million, down $12 million from the same quarter a year ago. These results include the special non-recurring items previously discussed. With the national network complete, capital spending declined 87 percent over the comparable period in 2001 to $17 million. Despite the challenging environment in the carrier market, Broadwing Communications continued to have solid success among high-value enterprise customers, attracting orders from new customers and expanding business opportunities with existing clients. In the second quarter, the National Accounts business, serving Fortune 2000 companies, generated over $11 million in revenue - almost doubling in size since the beginning of the year. Further, Broadwing's unique MultiConnect offering, which recently won the Frost & Sullivan award A Sullivan Award may refer to:
"This remains a challenging environment and we are managing our business accordingly," said Kevin KEVIN Keepers of the Eternal Vigilance of the Islamic Nation (fictional, from White Teeth by Zadie Smith) Mooney Mooney is family name, which is probably predominantly derived from the Irish Ó Maonaigh. It can also be spelled Moony, Meaney, Mauney, Moon, Money. The word can refer to: Companies
Meaney spelling The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , Broadwing Inc. "I am pleased by the progress we have made in the quarter to improve cash flow by carefully managing operating and capital expenses. Our focus persists on delivering superior service and products to our customers and continuing the financial discipline that will enable us to survive this challenging period in our industry." Conference Call/Webcast Broadwing will host a conference call discussing the second quarter results on Thursday Thursday: see week. , July 25 at 9:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT , which can be accessed by dialing 800-422-9256 (internationally at 847-619-6928) at least fifteen minutes prior to start time. The conference call will also be web-cast on the company's website at www.broadwing.com. A taped replay will be available for one week by calling 888-843-8996 (internationally at 630-652-3044), passcode 5616158. About Broadwing Broadwing Inc. (NYSE: BRW) is an integrated communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. comprised of Broadwing Communications and Cincinnati Bell. Broadwing Communications leads the industry as the world's first intelligent, all-optical, switched network provider and offers businesses nationwide a competitive advantage by providing data, voice and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the solutions that are flexible, reliable and innovative on its 18,500-mile optical network and its award-winning IP backbone. Cincinnati Bell is one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence and financial strength. The company was recently ranked number one in customer satisfaction by J.D. Power and Associates for local residential telephone service and residential long distance among mainstream users. Cincinnati Bell provides a wide range of telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. products and services to residential and business customers in Ohio, Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. and Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). . Broadwing Inc. is headquartered in Cincinnati, Ohio “Cincinnati” redirects here. For other uses, see Cincinnati (disambiguation). Cincinnati is a city in the U.S. state of Ohio and the county seat of Hamilton County. . For more information, visit www.broadwing.com. Note: Information included in this news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve potential risks and uncertainties. Broadwing's future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, Broadwing's ability to maintain its market position in communications services, general economic trends affecting the purchase of telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. services, world and national events that may affect the ability to provide services, and its ability to develop and launch new products and services. More information on potential risks and uncertainties is available in the company's recent filings with the Securities and Exchange Commission, including the 2001 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for Broadwing Inc. and Broadwing Communications Inc.
Broadwing Inc.
Consolidated Statements of Operations
(Unaudited)
(in millions - except per share amounts)
For the For the
Three Months Six Months
Ended June 30, % Ended June 30, %
2002 2001 Change 2002 2001 Change
-------- -------- ------ ----------- --------- ------
Revenue
---------------
Broadband $ 278.1 $ 320.6 (13%) $ 547.1 $ 619.1 (12%)
Local 209.9 206.9 1% 419.6 411.9 2%
Wireless 67.9 62.7 8% 129.9 119.8 8%
Other 20.4 19.3 6% 39.9 37.3 7%
Intersegment (23.8) (20.7) 15% (46.6) (40.5) 15%
-------- -------- ----------- ---------
Total Revenue 552.5 588.8 (6%) 1,089.9 1,147.6 (5%)
-------- -------- ----------- ---------
Costs &
Expenses
---------------
Cost of
Services and
Products 267.6 284.3 (6%) 532.2 556.7 (4%)
Selling,
General &
Administrative 126.8 153.0 (17%) 252.6 295.2 (14%)
-------- -------- ----------- ---------
EBITDA 158.1 151.5 4% 305.1 295.7 3%
Depreciation
and
Amortization 122.2 134.6 (9%) 243.8 262.2 (7%)
Restructuring
and Other
Charges -- 0.5 (100%) 16.5 9.6 72%
-------- -------- ----------- ---------
Operating
Income (Loss) 35.9 16.4 119% 44.8 23.9 87%
Equity Loss in
Unconsolidated
Entities -- 0.7 (100%) -- 4.0 (100%)
Minority
Interest
Expense 14.8 12.7 17% 29.0 25.4 14%
Other Expense
(Income), Net 0.4 3.0 (87%) (0.8) 1.0 (180%)
Interest
Expense 38.9 40.7 (4%) 77.2 83.1 (7%)
-------- -------- ----------- ---------
Loss from
Continuing
Operations
Before Income
Taxes and
Cumulative
Effect of
Change in
Accounting
Principle (18.2) (40.7) (55%) (60.6) (89.6) (32%)
Income Tax
Expense
(Benefit) 0.1 (5.2) (102%) (8.8) (13.8) (36%)
-------- -------- ----------- ---------
Loss from
Continuing
Operations
Before
Cumulative
Effect of
Change in
Accounting
Principle (18.3) (35.5) (48%) (51.8) (75.8) (32%)
Discontinued
Operations,
Net of Taxes (0.2) 6.7 n/m 217.6 13.1 n/m
Cumulative
Effect of
Change in
Accounting
Principle, Net
of Taxes -- -- n/m (2,008.7) -- n/m
-------- -------- ----------- ---------
Net Loss (18.5) (28.8) (36%) (1,842.9) (62.7) n/m
Dividends and
Accretion
Applicable to
Preferred
Stock 2.6 2.6 0% 5.2 5.2 0%
-------- -------- ----------- ---------
Net Loss
Applicable to
Common
Shareowners $ (21.1) $ (31.4) (33%) $ (1,848.1) $ (67.9) n/m
======== ======== =========== =========
Basic and
Diluted Loss
Per Common
Share
---------------
Loss from
Continuing
Operations
before
Cumulative
Effect
of Change in
Accounting
Principle $ (0.10) $ (0.17) $ (0.27) $ (0.37)
Discontinued
Operations,
Net of Taxes -- 0.03 1.00 0.06
Cumulative
Effect of
Change in
Accounting
Principle, Net
of Taxes -- -- (9.20) --
-------- -------- ----------- ---------
Net Loss Per
Common Share $ (0.10) $ (0.14) $ (8.47) $ (0.31)
======== ======== =========== =========
Weighted
Average Common
Shares
Outstanding
---------------
- Basic and
Diluted 218.4 217.4 218.3 216.9
Other Data:
---------------
Capital
Expenditures $ 47.0 $ 175.6 (73%) $ 99.7 $ 374.0 (73%)
Free Cash Flow
(from
Continuing
Operations) $ (24.9) $ (94.0) (74%) $ (89.1) $(228.0) (61%)
Cash
Expenditures
for
Restructuring $ (12.0) $ (5.0) 140% $ (44.0) $ (9.0) 389%
Broadwing Inc.
Consolidated Statements of Operations
(Unaudited)
(in millions - except per share amounts)
2nd 3rd 4th 1st 2nd
Quarter Quarter Quarter Quarter Quarter
2001 2001 2001 2002 2002
------------------------------------ --------
Revenue
-----------------------
Broadband $ 320.6 $ 306.1 $ 272.4 $ 269.0 $ 278.1
Local 206.9 208.5 211.3 209.7 209.9
Wireless 62.7 64.3 63.9 62.0 67.9
Other 19.3 20.3 20.6 19.5 20.4
Intersegment (20.7) (21.2) (22.2) (22.8) (23.8)
------------------------------------ --------
Total Revenue 588.8 578.0 546.0 537.4 552.5
------------------------------------ --------
Costs & Expenses
-----------------------
Cost of Services and
Products 284.3 287.6 286.6 264.6 267.6
Selling, General &
Administrative 153.0 136.6 129.8 125.8 126.8
------------------------------------ --------
EBITDA 151.5 153.8 129.6 147.0 158.1
Depreciation and
Amortization 134.6 143.3 149.2 121.6 122.2
Restructuring and Other
Charges 0.5 -- 232.0 16.5 --
------------------------------------ --------
Operating Income (Loss) 16.4 10.5 (251.6) 8.9 35.9
Equity Loss in
Unconsolidated
Entities 0.7 -- -- -- --
Minority Interest
Expense 12.7 13.8 12.1 14.2 14.8
Other Expense (Income),
Net 3.0 (7.3) (22.0) (1.2) 0.4
Interest Expense 40.7 44.1 40.9 38.3 38.9
------------------------------------ --------
Loss from Continuing
Operations Before
Income Taxes and
Cumulative Effect of
Change in Accounting
Principle (40.7) (40.1) (282.6) (42.4) (18.2)
Income Tax Expense
(Benefit) (5.2) (4.5) (78.2) (8.9) 0.1
------------------------------------ --------
Loss from Continuing
Operations Before
Cumulative
Effect of Change in
Accounting Principle (35.5) (35.6) (204.4) (33.5) (18.3)
Discontinued
Operations, Net of
Taxes 6.7 7.7 8.8 217.8 (0.2)
Cumulative Effect of
Change in Accounting
Principle, Net of
Taxes -- -- -- (2,008.7) --
------------------------------------ --------
Net Loss (28.8) (27.9) (195.6) (1,824.4) (18.5)
Dividends and Accretion
Applicable to
Preferred Stock 2.6 2.6 2.6 2.6 2.6
------------------------------------ --------
Net Loss Applicable to
Common Shareowners $ (31.4)$ (30.5) $(198.2) $(1,827.0) $ (21.1)
==================================== ========
Basic and Diluted Loss
Per Common Share
-----------------------
Loss from Continuing
Operations before
Cumulative Effect
of Change in Accounting
Principle $ (0.17)$ (0.18) $ (0.95) $ (0.17) $ (0.10)
Discontinued
Operations, Net of
Taxes 0.03 0.04 0.04 1.00 --
Cumulative Effect of
Change in Accounting
Principle, Net of
Taxes -- -- -- (9.21) --
------------------------------------ --------
Net Loss Per Common
Share $ (0.14)$ (0.14) $ (0.91) $ (8.38) $ (0.10)
==================================== ========
Weighted Average Common
Shares Outstanding
-----------------------
- Basic and Diluted 217.4 217.8 218.0 218.2 218.4
Other Data:
-----------------------
Capital Expenditures $ 175.6 $ 162.8 $ 111.7 $ 52.7 $ 47.0
Free Cash Flow (from
Continuing Operations) $ (94.0)$ (23.2) $ (63.8) $ (64.2) $ (24.9)
Cash Expenditures for
Restructuring $ (5.0)$ (5.0) $ (5.0) $ (32.0) $ (12.0)
Broadwing Inc.
Consolidated Balance Sheets
(Unaudited)
June 30, Dec. 31,
(in millions) 2002 2001
----------- ----------
Assets
Cash and Cash Equivalents $ 23.4 $ 30.0
Receivables - Net 311.8 310.9
Other Current Assets 83.2 109.1
Property, Plant and Equipment - Net 2,930.9 3,059.3
Goodwill - Net 40.9 2,048.6
Other Intangible Assets - Net 378.1 396.3
Noncurrent Investments 19.6 16.3
Other Noncurrent Assets 227.9 320.1
Assets of Discontinued Operations -- 21.4
----------- ----------
Total Assets $ 4,015.8 $ 6,312.0
=========== ==========
Liabilities and Shareowners' Equity
Debt Maturing in One Year $ 62.0 $ 150.0
Other Current Liabilities 628.3 760.3
Long-Term Debt, Less Current Portion 2,543.8 2,702.0
Unearned Revenue, Less Current Portion 351.3 415.9
Other Noncurrent Liabilities 157.0 157.8
Minority Interest 439.9 435.7
Liabilities of Discontinued Operations -- 11.9
Common Shareowners' Equity (166.5) 1,678.4
----------- ----------
Total Liabilities and Shareowners' Equity $ 4,015.8 $ 6,312.0
=========== ==========
Other Data:
Common Shares Outstanding at Balance Sheet
Date 218.5 218.1
Credit Facility Availability $ 205.0 $ 353.0
Debt Covenants (per credit agreement):
----------------------------------------------
Debt to EBIDTA Ratio - Calculated 3.32 3.70
Debt to EBIDTA Ratio - Required 4.50 5.00
Senior Secured Debt to EBITDA Ratio -
Calculated 2.78 3.16
Senior Secured Debt to EBITDA Ratio - Required 3.25 3.75
Debt to Capitalization Ratio - Calculated 43% 46%
Debt to Capitalization Ratio - Required 55% 55%
Interest Coverage Ratio - Calculated 3.52 3.39
Interest Coverage Ratio - Required 2.25 2.00
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