Cincinnati Bell Revenues Up 31 Percent In Second Quarter; Driven By Convergys And Earns 31 Cents Per Share.CINCINNATI--(BUSINESS WIRE)--July 16, 1998-- Results Include 14 Cents for Year-2000, Regulator-Mandated, PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. Startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. & Acquisition-Related Costs 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. Inc. (NYSE NYSE See: New York Stock Exchange :CSN CSN Crosby, Stills, and Nash (band) CSN Centrala studiestödsnämnden (Swedish: state education grant and loan program) CSN Confédération des Syndicats Nationaux (French) ) today announced revenues of $567.2 million and net income of $42.5 million, or 31 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. for the second quarter of 1998. 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. was $83.8 million. Operating results for the quarter were affected by several items, including anticipated increases in spending for programming and other costs required to achieve Year-2000 compliance and to comply with regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. to promote local-service competition for telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. in the 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. area. These costs totaled $15.5 million, or 7 cents per share in the quarter. For the second quarter of 1997, Cincinnati Bell reported revenues of $433.1 million. Operating income was $81.6 million, which includes $2.6 million in Year-2000 and regulator-mandated expenses, but excludes $6 million in pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern pension settlement gains. On the same basis, net income was $50.3 million and earnings per share was 37 cents diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. . "As we indicated in May, this year's second quarter was especially challenging because of near-term near-term adj. Of, for, or involving a short period of time in the near future. dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. from a recent acquisition and from our PCS wireless investment, plus the impact of heavy spending for Year 2000 compliance and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. mandates," Cincinnati Bell Inc. President and Chief Executive Officer John LaMacchia said. "Despite those factors, our momentum improved toward the end of the quarter, allowing our earnings to reach the top end of the range we forecast in May. I look forward to continued earnings improvement from each of our major businesses throughout the remainder of the year." In the first quarter, Cincinnati Bell acquired AT&T Solutions Customer Care (formerly known as Transtech For the Finnish railway rolling stock manufacturer, see . Transtech is an unreleased line of toys under the Transformers umbrella. History After the Beast Machines line ended, Hasbro planned a follow-up series called Transtech. ) and the teleservices (1) Refers to a variety of enhanced services via telephone, including fax-on-demand, voice mail and computer telephone integration. See CTI and IVR. (2) Services by human operators for taking orders and providing customer assistance and other tasks via telephone. operations of Maritz
adj. 1. Almost exact or correct: the approximate time of the accident. 2. $106 million to Cincinnati Bell's second-quarter revenues. Second-quarter net income also included 3 cents in equity losses from the May startup of Cincinnati Bell's personal communications services See PCS. (PCS) venture with AT&T, which was recorded in other income. That loss was offset in part, however, by a strong gain in income from the company's venture with Ameritech AMERITECH American Information Technologies for cellular service in the Cincinnati, Dayton Dayton, city (1990 pop. 182,044), seat of Montgomery co., SW Ohio, on the Great Miami River where it is joined by the Stillwater River; inc. 1805. It is the trade center for a fertile farm area, but is best known for its involvement with industry, invention, and , and Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. regions. The second quarter also included 4 cents in costs and interest expense related to the Transtech and Maritz acquisitions. For the first half of 1998, Cincinnati Bell's revenues were $1.075 billion, up 25 percent from the first half of 1997. Operating income excluding a first-quarter 1998 charge for purchased research and development costs of $42.6 million, and $21 million in pension settlement gains in the first half of 1997, increased 5 percent to $168.9 million. Net income excluding the gains decreased 6 percent to $91.7 million, or 66 cents per share diluted. Communications Services Good growth in telephone lines in service and access minutes of use contributed to another solid quarter for Cincinnati Bell's communications services businesses. Revenues increased 6 percent to $219.5 million. Operating income was $43.7 million, comparable with last year's second quarter excluding pension settlement gains. This year's second-quarter results include $2.3 million in Year-2000 compliance costs and $5.4 million in regulator-mandated costs. Cincinnati Bell Telephone's core local-exchange business remained strong. Access lines increased 4.2 percent for the 12 months ended June June: see month. 30, 1998. Minutes of use for switched access services for the quarter increased 5.8 percent. During the quarter, Cincinnati Bell Telephone's new modified price-cap regulation Price-cap regulation is a form of regulation designed in the 1980s by UK Treasury economist Stephen Littlechild, which has been applied to all of the privatized British network utilities. plan took effect for Ohio customers. The plan freezes basic local service rates for residence customers for three years, but provides the company with significant flexibility in pricing value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: custom calling services and business services. Cincinnati Bell Telephone recently asked for a similar plan for its customers in northern 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. . Cincinnati Bell Telephone also became the first local telecommunications company See telecom company. in the nation to offer 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 Call Manager, a solution that lets customers manage incoming Incoming is a 3-D shooter developed by Rage Software and published by Interplay. The PC version was released in late 1998, and the Dreamcast version, a launch title for the console, was released in 1998 in Japan and in 1999 in the rest of the world. calls while they are using the same line to surf the Internet. Cincinnati Bell has retained royalty rights to the service in the event other communications companies 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. choose to offer it. In May, Cincinnati Bell and AT&T began what has become one of the nation's most successful launches by a wireless services provider in one market. Cincinnati Bell Wireless has more than 14,000 new PCS subscribers. The partnership will begin service in the Dayton, Ohio Dayton is a city in southwestern Ohio, United States. It is the county seat and largest city of Montgomery County. As of the 2005 census estimate, the population of Dayton was 158,873. market during the third quarter. Cincinnati Bell accounts for the results of the venture on an equity basis, in Other income, pending federal approval of the PCS license transfer and completion of their partnership agreement, expected later this year. On April 27, Cincinnati Bell Inc. announced the formation of a new subsidiary, Convergys Convergys (NYSE: CVG) is a multi-national corporation that provides management consulting services, outsourced billing, customer care and employee care, and transaction management software. Corporation, which it intends to spin off to Cincinnati Bell shareholders by the end of this year. Convergys holds the businesses of Cincinnati Bell Information Systems (CBIS CBIS Computer Based Information System CBIS Christian Brothers Investment Services CBIS Cincinnati Bell Information Systems CBIS Chinese Biodiversity Information System CBIS Certified Brain Injury Specialist ) and MATRIXX Marketing, and Cincinnati Bell's interest in its cellular-service partnership with Ameritech. On May 26, Convergys filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering by Convergys. The Commission is reviewing that filing. Cincinnati Bell is therefore presenting consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: quarterly results for Cincinnati Bell Inc., and for Convergys Corporation as if it were operating as a separate entity. Convergys' results are presented to show results for the CBIS and MATRIXX, and for the cellular partnership. Convergys Consolidated Results Convergys Corporation reported consolidated revenues for the second quarter of $363.6 million, up 50 percent from $243.1 million in the same quarter last year. Earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) was $48.4 million, up 16 percent for the quarter. EBIT is operating income excluding special items, plus cellular partnership earnings. Convergys' second-quarter net income was $23.6 million, down 16 percent from $28.2 million for the second quarter of 1997, principally because of acquisition-related costs and increased Year-2000 compliance costs. Acquisition-related costs included $6 million in increased amortization of goodwill and other intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. and $10 million in additional interest expense. Year-2000 compliance costs increased to $7.8 million in the second quarter from $1.5 million in the same period last year. For the first half, Convergys reported revenues of $672.2 million and net income of $47.7 million, excluding $26.4 million net of tax in purchased research and development costs associated with the Transtech acquisition. That compares with revenues of $486.5 million and net income of $55 million for the first half of 1997. Convergys' 1998 first-half results include $8 million in amortization and $13 million in interest related to acquisitions, plus $13.5 million in Year-2000 compliance costs. Year-2000 compliance costs were $2.1 million in the first half of 1997. The cellular partnership contributed $6.8 million to other income of Convergys for the second quarter, and $10.8 million for the first half of 1998. CBIS (Information Management Group) Second-quarter revenues for CBIS, the Information Management Group of Convergys, increased 9 percent to $146 million. Operating income for the group increased 8 percent to $27.6 million. Data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a revenues, driven by subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. growth among its communications clients, provided the majority of the gain in quarterly revenues. These quarterly results include a significant increase in spending for Year-2000 compliance to $5 million, up from $1.5 million in the second quarter last year. MATRIXX Marketing (Customer Management Group) Second-quarter revenues for MATRIXX, the Customer Management Group of Convergys, doubled to $222 million and its operating income increased 11 percent to $14.1 million. Year-2000 compliance costs were $2.8 million for the second quarter. The group had no Year-2000 costs in the second quarter last year. Revenue growth came largely from the Maritz and Transtech acquisitions. On an operating basis, those businesses were somewhat better than breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations for the quarter. In May, Cincinnati Bell disclosed that revenues from AT&T for business formerly provided by Transtech were running below its expectations. That revenue stream is subject to guaranteed minimums under the first three years of an 8-year contract signed at the time of the Transtech acquisition. The revenues of $57 million for the quarter continue to be below the anticipated $300 million annual run rate required by the contract that began in March 1998. AT&T has provided assurances that it plans to meet its requirements under the contract. MATRIXX continues to move aggressively to complete its fourth-quarter 1997 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). program, including reducing its workforce, closing facilities, and capturing the efficiencies and scale advantages it anticipates from the integration of Transtech and the Maritz operations into its other businesses. MATRIXX recently signed a contract to provide customer care and customer services support for Bell Atlantic Video's new direct broadcast satellite entertainment service. The contract follows Bell Atlantic's earlier award of a billing and customer management contract for the new service to CBIS. Cincinnati Bell is the leader in helping communications companies and marketing-intensive businesses worldwide compete more effectively through advanced billing, customer information and marketing solutions. It is also the premier provider of communications services in Greater Cincinnati. 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 for Cincinnati Bell and for Convergys Corporation. The future results of Cincinnati Bell and Convergys could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the loss of a significant client, difficulties in completing or integrating acquisitions, Year-2000 compliance, and other factors disclosed in Cincinnati Bell's most recent 10-Q and 10-K reports to the SEC, and in the S-1 registration statement filed with the SEC by Convergys Corporation. -0-
CINCINNATI BELL INC.
Revenues, Net Income and Earnings Per Common Share
In Millions Except Per Share Amounts
(Unaudited)
Second Quarter
Change
1998 1997 Amount %
Revenues $567.2 $433.1 $134.1 31
Net Income $42.5 $54.2 (b) $(11.7) (22)
Earnings Per Common Share
- Basic $0.31 $0.40 (b) $(0.09) (23)
- Diluted $0.31 $0.39 (b) $(0.08) (21)
Weighted Average Common Shares Outstanding (millions)
- Basic 136.0 135.2 0.8
- Diluted 138.6 137.7 0.9
Six Months
Change
1998 1997 Amount %
Revenues $1,075.3 $862.6 $212.7 25
Net Income $65.3 (a) $111.4 (b) $(46.1) (41)
Earnings Per Common Share
- Basic $0.48 (a) $0.82 (b) $(0.34) (41)
- Diluted $0.47 (a) $0.81 (b) $(0.34) (42)
Weighted Average Common Shares Outstanding (millions)
- Basic 135.9 135.1 0.8
- Diluted 138.5 137.6 0.9
(a) Includes $42.6 million in acquired research and development
costs which decreased net income by $26.4 million or $.19 per diluted
common share.
(b) Includes special credits of $6.0 million and $21.0 million for
the second quarter and six months, respectively, which increased net
income $3.8 million and $13.4 million and increased diluted earnings
per share by $.02 and $.10.
-0-
Cincinnati Bell Inc. Consolidated Statements of Income (Unaudited) For the Three Months For the Six Months Ended June 30, % Ended June 30, % 1998 1997 Chg. 1998 1997 Chg. Revenues Communications Services Local Service $ 100.9 $ 95.8 5 $ 201.5 $ 190.7 6 Network Access 45.7 43.2 6 90.3 83.7 8 Other Communications 72.9 68.1 7 144.2 132.6 9 ----- ----- -- ----- ----- -- 219.5 207.1 6 436.0 407.0 7 Information Systems 146.1 134.0 9 290.0 264.5 10 Teleservices 222.1 111.2 100 389.0 226.4 72 Intersegment Revenues (20.5) (19.2) 7 (39.7) (35.3)12 ----- ----- -- ----- ----- -- Total Revenues 567.2 433.1 31 1,075.3 862.6 25 Costs & Expenses Cost of Providing Services & Products Sold 329.2 232.4 42 610.3 463.9 32 Selling, General & Admin. 85.2 70.9 20 168.9 144.5 17 Deprec. & Amortization 53.5 45.6 17 98.7 89.8 10 Year 2000 Programming 10.1 1.5 - 18.7 2.1 - Mandated Telecom. Costs 5.4 1.1 - 9.8 2.2 - Purchased R&D Costs - - - 42.6 - - Special Charges (Credits) - (6.0) - - (21.0) - ----- ----- -- ----- ----- -- Total Costs and Expenses 483.4 345.5 40 949.0 681.5 39 Operating Income 83.8 87.6 (4) 126.3 181.1(30) Other Income(Expense)-Net (0.8) 4.9 - 0.8 8.3(90) Interest Expense 17.6 9.1 93 28.4 17.7 60 ----- ----- -- ----- ----- -- Income Before Income Taxes 65.4 83.4 (22) 98.7 171.7(43) Income Taxes 22.9 29.2 (22) 33.4 60.3(45) ----- ----- -- ----- ----- -- Net Income $ 42.5 $ 54.2 (22) $ 65.3 $ 111.4(41) Earnings Per Common Share -Basic $ 0.31 $ 0.40 (23) $ 0.48 $ 0.82(42) -Diluted $ 0.31 $ 0.39 (21) $ 0.47 $ 0.81(42) Dividends Declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. Per Common Share $ 0.10 $ 0.10 $ 0.20 $ 0.20 Weighted Average Common Shares Outstanding (millions) -Basic 136.0 135.2 135.9 135.1 -Diluted 138.6 137.7 138.5 137.6 Other Data Operating Margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (a) 14.8% 18.8% 15.7% 18.6% Capital Additions: Telephone Plant $ 43.2 $ 42.4 $ 82.3 $ 75.7 Other (incl. acquistns.) 32.7 34.7 706.4 45.5 Total $ 75.9 $ 77.1 $ 788.7 $ 121.2 Access Min. of Use (mill.) 1,046 989 2,099 1,985 Market Price Per Share High $ 38.625 $ 33.250 $ 38.625 $ 33.750 Low $ 28.500 $ 26.063 $ 28.500 $ 26.063 Close $ 28.625 $ 31.500 $ 28.625 $ 31.500 (a) Excluding special charges in 1997 and purchased research and development costs from acquisitions for the six months ended June 30, 1998. -0-
Cincinnati Bell Inc.
Consolidated Balance Sheet
(Unaudited)
June 30, Dec. 31, June 30,
(Dollars in millions) 1998 1997 1997
Assets
Cash and Cash Equivalents $ 1.6 $ 9.9 $ 9.2
Receivables - Net 481.4 350.8 333.8
Other Current Assets 91.1 89.3 77.5
Property, Plant & Equipment-Net 819.8 703.2 1,012.8
Other Assets 901.2 345.5 303.3
Total Assets $ 2,295.1 $ 1,498.7 $ 1,736.6
Liabilities and Shareowners' Equity
Debt Maturing in One Year $ 905.9 $ 190.6 $ 233.4
Other Current Liabilities 391.8 344.3 288.4
Long-Term Debt 268.5 269.2 274.3
Deferred Credits, Other Liabilities 106.6 114.9 209.1
Common Shareowners' Equity 622.3 579.7 731.4
Total Liabilities
& Shareowners' Equity $ 2,295.1 $ 1,498.7 $ 1,736.6
Other Data
Net Debt (Debt less Cash) $ 1,172.8 $ 449.9 $ 498.5
Common Shares
Outstanding (millions) 136.6 136.1 135.9
Network Access Lines (000)
Residence 697 686 677
Business 328 319 307
Total 1,025 1,005 984
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Convergys Corporation Consolidated Statements of Income (Unaudited) For the Three Months For the Six Months Ended June 30, % Ended June 30, % (In millions) 1998 1997 Chg. 1998 1997 Chg. Revenues: CBIS (Information Management) $ 146.1 $ 134.0 9 $ 290.0 $ 264.5 10 MATRIXX (Customer Management) 222.1 111.2 100 389.0 226.4 72 Intersegment Revenues (4.6) (2.1) - (6.8) (4.4) - ----- ----- --- ----- ----- -- Total Revenues 363.6 243.1 50 672.2 486.5 38 Costs and Expenses: Cost of Providing Services & Products Sold 218.4 131.1 67 393.6 265.5 48 Selling, General & Admin. 50.0 38.4 30 98.9 77.4 28 R&D Costs 19.5 19.4 1 38.6 37.7 2 Depreciation & Amortization 26.3 14.5 81 44.7 28.4 57 Year 2000 Programming Costs 7.8 1.5 - 13.5 2.1 - Purchased R&D Costs - - - 42.6 - - ----- ----- -- ----- -- Total Costs and Expenses 322.0 204.9 57 631.9 411.1 54 Operating Income 41.6 38.2 9 40.3 75.4 (47) Other Income (Expense), net 7.5 5.3 42 11.5 9.6 20 Interest Expense 11.2 0.8 - 17.6 2.1 - Income Before Income Taxes 37.9 42.7 (11) 34.2 82.9 (59) Income Taxes 14.3 14.5 (1) 12.9 27.9 (54) Net Income $ 23.6 $ 28.2 (16) $ 21.3 $ 55.0 (61) Other Data Operating Margin (a) 11.4% 15.7% 12.3% 15.5% (a) Excludes purchased research and development costs resulting from acquisitions for the six months ended June 30, 1998. -0-
Convergys Corporation
Consolidated Balance Sheets
(Unaudited)
June 30, Dec. 31, June 30,
(Dollars in millions) 1998 1997 1997
Assets
Cash and Cash Equivalents $ 1.5 $ 2.1 $ 5.7
Receivables - Net 331.9 222.8 209.2
Other Current Assets 36.5 40.9 26.3
Property, Plant & Equip.-Net 215.3 130.0 126.7
Other Assets 824.1 258.6 263.2
Total Assets $1,409.3 $ 654.4 $ 631.1
Liabilities & Shareowners' Equity
Debt Maturing in One Year $ 754.8 $ 59.1 $ 61.2
Other Current Liabilities 194.5 157.6 124.4
Long-Term Debt 0.9 1.2 5.7
Defrd. Credits & Other Liabl. 8.1 5.8 12.3
Common Shareowners' Equity 451.0 430.7 427.5
Total Liabilities
& Shareowners' Equity $1,409.3 $ 654.4 $ 631.1
-0- CONTACT: Wayne Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. Buckhout Cincinnati Bell (513) 397-1081 |
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