Consistent Execution Drives Improved First Quarter Results for Cincinnati Bell; Wireless Subscriber Base Passes 500,000; Data and Technology Operations and Reduced Interest Expense Lead to Strong First Quarter Performance.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. -- 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 :CBB CBB Celebrity Big Brother CBB College van Beroep voor het Bedrijfsleven (Dutch) CBB Cattlemen's Beef Board CBB Coalition for Buzzards Bay CBB Could Be Better (visual effects) CBB Can't Be Bothered ) today announced improved results for the first quarter driven by continued growth in data and technology operations, strong wireless net additions and lower interest expense. For the quarter, revenue was $298 million with 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. of $71 million and net income of $14 million, or 5 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. . Excluding special items, net income was $22 million or 8 cents per share, up $6 million or 3 cents per share from the first quarter of 2005 also excluding special items. Special items in the current quarter include a reserve established in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of settling two previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). shareholder lawsuits and a 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 state net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry-forwards. "Providing a superior local network and outstanding customer service drove reduced churn churn: see butter. and helped Cincinnati Bell Wireless surpass 500,000 subscribers for the first time ever," said Jack Cassidy For the bass guitarist from Jefferson Airplane, see Jack Casady. Jack Cassidy (March 5, 1927 – December 12, 1976) was an American actor, who achieved success in theater, cinema and television. , president and chief executive officer of Cincinnati Bell, Inc. "This milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. is yet another demonstration of our ability to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our strategy, succeed in a highly competitive market and continue to deliver value to our customers." First Quarter Highlights --Net postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. wireless additions totaled 13,000, the best first-quarter performance since 2001. Meanwhile, postpaid wireless churn improved to 1.4 percent, the lowest level since the third quarter of 2000. 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. migration to the GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. network continued with less than 5 percent of total minutes of use now occurring on the TDMA (Time Division Multiple Access) A satellite and cellular phone technology that interleaves multiple digital signals onto a single high-speed channel. For cellular, TDMA triples the capacity of the original analog method (FDMA). network. The company expects to migrate all remaining customers off of its TDMA network by June June: see month. 30, 2006. --Penetration of the company's "Super Bundle To sell hardware and software as a combined product or to combine several software packages for sale as a single unit. Contrast with unbundle. See bundled software and bundling. " of services climbed to 27 percent of Cincinnati Bell households within its traditional operating area, reflecting the addition of 5,000 subscribers in the quarter. Bundling bundling, courtship custom, thought to have originated in Holland and the British Isles. It was extended to America, particularly to New England, and most widely practiced in the years prior to the Revolution of 1776. success drove revenue per household 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 $81, up 4 percent from a year ago. --Cincinnati Bell's DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary subscriber base grew to 171,000, a 21 percent increase versus the first quarter of 2005. Penetration The successful unauthorized breach of a security perimeter. See penetration test. of in-territory consumer primary access lines reached 28 percent, representing 150,000 subscribers. Total in-territory access line penetration was 19 percent, a gain of 4 percentage points from a year ago. --Free cash flow(1) of $30 million in the first quarter of 2006 was a $16 million improvement from the first quarter of 2005 due largely to a reduction in financing fees. Financial and Operations Review "Improved performance in the first quarter is the direct result of focused execution of our strategy," said Brian Ross
Brian Ross (born September 4, 1944 in Ballston Spa, New York) is a racecar driver. He won Rookie of the Year honors in the Auto Racing Club of America in 2000. , chief financial officer of Cincinnati Bell. "Cash flow strengthened, wireless growth continued, access line performance remained stable and investments in data center operations provided growing revenue streams from equipment sales and managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality ." Cincinnati Bell recorded quarterly revenue of $298 million, an increase of 3 percent, or $10 million, from the first quarter of 2005. Higher contributions from equipment sales, managed services and data more than offset lower local voice revenue and reduced wireless roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. revenue, a result of the merger of AT&T Wireless and Cingular Wireless. Adjusted 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 (2) (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
As reported in a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the SEC on May 1, 2006, Cincinnati Bell has entered into a Memorandum of Understanding A Memorandum of Understanding (MoU) is a legal document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action and may not imply a legal commitment. (MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. ) to settle two previously disclosed shareholder lawsuits. The company has reserved $6 million in the first quarter of 2006 to reflect its anticipated contribution to the settlement fund and to cover other settlement-related expenses. Under the terms of the MOU, the total settlement is $36 million, which includes the insurance companies' portion of the settlement. Adjusted EBITDA excludes the charge associated with the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement. Local Communications Services Total access line performance was stable as the rate of loss was 4.1 percent equaling the rate of loss during the fourth quarter of 2005. At the end of the quarter, Cincinnati Bell had 40,000 out-of-territory access lines, up 31 percent from the prior year. Wireless substitution Substitution Arsinoë put her own son in place of Orestes; her son was killed and Orestes was saved. [Gk. Myth.: Zimmerman, 32] Barabbas robber freed in Christ’s stead. [N.T.: Matthew 27:15–18; Swed. Lit. continued to be the primary reason for the loss of in-territory lines, as the impact of cable telephony See cable telephone. remained muted mut·ed adj. 1. a. Muffled; indistinct: a muted voice. b. Mute or subdued; softened: muted colors. 2. ; and, in fact, the number of lines lost to cable telephony decreased from the prior quarter. The Local segment produced quarterly revenue of $186 million, down 2 percent from the first quarter of 2005 as a 17 percent increase in DSL revenue partially offset lower voice revenue. Adjusted EBITDA of $95 million declined 2 percent from the prior year. An 8 percent reduction of selling, general and administrative expense partially offset the impact of lower access lines. Wireless Services Accelerated subscriber growth continued in the first quarter with postpaid net activations of 13,000, an increase of 19,000 from a year ago. Gross activations totaled 26,000, up 43 percent from the first quarter of 2005. On a sequential One after the other in some consecutive order such as by name or number. basis, postpaid average revenue per user (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. ) of $45 was essentially unchanged. Gross activations for prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. were up 14 percent from a year ago resulting in net activations
of 2,000. Prepaid ARPU improved sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to $20 reflecting the impact of mobile-to-mobile rate plans introduced in the fourth quarter of 2005. The Wireless segment generated quarterly revenue of $62 million, up 7 percent sequentially, showing positive sequential growth for the first time since the second quarter of 2004. Revenue was also up 1 percent from the first quarter of 2005 as growth in data and equipment revenue more than offset lower subscriber voice revenue and a reduction in roaming revenue related to the merger of AT&T Wireless and Cingular. Adjusted EBITDA for the first quarter of 2006 decreased by $7 million compared to the first quarter of 2005. The decrease is primarily due to increased expenses supporting growing wireless activations and reduced wireless roaming revenue. Operating income of $4 million for the Wireless segment increased by $24 million compared to the first quarter a year ago. Operating income for the first quarter of 2005 includes a $24 million write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of the company's TDMA network assets. Decreased depreciation due to the write-down of TDMA assets offset the increased costs associated with the growing activations and reduced roaming revenue. During the quarter, Cincinnati Bell completed the purchase of the 20 percent interest in Cincinnati Bell Wireless that was owned by Cingular Wireless. As previously announced, the purchase price was $83 million. Cincinnati Bell now owns 100 percent of Cincinnati Bell Wireless. This acquisition has no effect on the company's operating income, which historically has included 100 percent of Wireless operating income; however, the acquisition eliminates the reduction to the company's net income for the 20 percent Wireless minority interest. Hardware and Managed Services The primary operations of the Hardware and Managed Services segment include three fully leased data centers providing data co-location Placing equipment owned by a customer or competitor in an organization's own facility. Telephone companies often allow co-location in order to provide the best interconnection between devices. and managed services to key enterprise customers. Driven by strong equipment sales and growing data center and related managed service activity, revenue from the Hardware and Managed Services segment increased 43 percent from the first quarter of 2005 to $39 million in the first quarter. Adjusted EBITDA was up 15 percent to $3 million from a year ago. Other Communications Services The Other Communications Services segment, which includes long distance, security monitoring and payphone payphone Noun a coin-operated telephone payphone pay n → Münztelefon nt; (card phone) → Kartentelefon nt operations, generated revenue of $20 million, up 4 percent from the first quarter of 2005. Adjusted EBITDA of $7 million increased 13 percent from a year ago on the strength of growing business revenue and reduced sales and marketing expense. Conference Call/Webcast Cincinnati Bell will host a conference call today at 10:00 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 ) to discuss its results for the first quarter 2006. A live webcast of the call will be available via the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of www.cincinnatibell.com. The conference call dial-in number is 866.278.7926. International callers may dial 904.596.2360. A taped replay call will be available one hour after the conclusion of the teleconference until 5:00 p.m. (EDT) on May 16, 2006. For U.S. callers, the replay will be available at 888.284.7564. For international callers, the replay will be available at 904.596.3174. The replay reference number is 186309. An archived version of the webcast will also be available at www.cincinnatibell.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Note Certain of the statements and predictions contained in this release constitute 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. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and . In particular, statements, projections or estimates that include or reference the words "believes," "anticipates," "plans," "intends," "expects," "will," or any similar expression fall within the safe harbor for forward-looking statements contained in the Reform Act. Actual results or outcomes may differ materially from those indicated or suggested by any such forward-looking statement for a variety of reasons, including, but not limited to: Cincinnati Bell's ability to maintain its market position in communications services, including wireless, wireline and internet services; general economic trends affecting the purchase or supply 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; changes in the regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. environment; any rulings, orders or decrees that may be issued by any court or arbitrator arbitrator n. one who conducts an arbitration, and serves as a judge who conducts a "mini-trial," somewhat less formally than a court trial. In most cases the arbitraror is an attorney, either alone or as part of a panel. ; restrictions imposed under various credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities and debt instruments; work stoppages caused by labor disputes; and Cincinnati Bell's ability to develop and launch new products and services. More information on potential risks and uncertainties is available in recent filings with the Securities and Exchange Commission, including Cincinnati Bell's 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. report, Form 10-Q Form 10-Q See 10-Q. reports and Form 8-K reports. The forward-looking statements included in this release represent company estimates as of May 2, 2006. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change. Use of Non-GAAP Financial Measures This press release contains information about free cash flow and adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA). 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures. Detailed reconciliations of free cash flow and adjusted EBITDA 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. (1) Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as 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 95 cash provided by (used in) operating, financing and investing activities, adjusted for the issuance and repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of debt and for the proceeds from the sale or the use of funds from the purchase of business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . 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. (2) Adjusted EBITDA provides a useful measure of operational performance. The company defines adjusted EBITDA as GAAP Operating Income plus depreciation, amortization, restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , asset impairments 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 Adjusted EBITDA as defined by other companies. About Cincinnati Bell Inc. Cincinnati Bell Inc. (NYSE:CBB) is parent to one of the nation's most-respected and best-performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. With headquarters 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. , 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). . For more information, visit www.cincinnatibell.com.
Cincinnati Bell Inc.
Consolidated Statements of Income
(Unaudited)
(dollars in millions, except per share amounts)
Three Months
Ended March 31, %
2006 2005 Change
------- ------- ------
Revenue $298.2 $288.6 3%
Costs and expenses
Cost of services and products 128.0 109.2 17%
Selling, general and administrative 58.3 58.1 0%
Depreciation and amortization 34.4 43.0 (20%)
Shareholder claim settlement 6.3 - n/m
Asset impairments and other charges 0.1 23.1 (100%)
------- -------
Operating income 71.1 55.2 29%
Minority interest expense (income) 0.4 (4.3) (109%)
Interest expense 39.6 50.5 (22%)
Loss on extinguishment of debt - 7.9 (100%)
Other expense (income), net (0.1) 0.5 (120%)
------- -------
Income before income taxes 31.2 0.6 n/m
Income tax expense 17.1 3.8 n/m
------- -------
Net income (loss) 14.1 (3.2) n/m
Preferred stock dividends 2.6 2.6 0%
------- -------
Net income (loss) applicable to common
shareowners $11.5 $(5.8) n/m
======= =======
Basic earnings (loss) per common share $0.05 $(0.02)
-----------------------------------------------======= =======
Diluted earnings (loss) per common share $0.05 $(0.02)
-----------------------------------------------======= =======
Weighted average common shares outstanding
(millions)
-----------------------------------------------
- Basic 246.6 245.6
- Diluted 251.2 245.6
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(dollars in millions)
Three Months
Ended March 31, %
2006 2005 Change
------- ------- ------
Local
Revenue
Voice $121.0 $128.0 (5%)
Data 56.6 53.2 6%
Other 8.7 9.0 (3%)
------- -------
Total revenue 186.3 190.2 (2%)
Operating costs and expenses:
Cost of services and products 58.7 57.7 2%
Selling, general and administrative 32.5 35.4 (8%)
Depreciation 25.6 27.1 (6%)
------- -------
Total operating costs and expenses 116.8 120.2 (3%)
------- -------
Operating income $69.5 $70.0 (1%)
======= =======
Wireless
Revenue
Service $55.3 $55.6 (1%)
Equipment 6.5 5.6 16%
------- -------
Total revenue 61.8 61.2 1%
Operating costs and expenses:
Cost of services and products 36.2 29.3 24%
Selling, general and administrative 14.3 13.4 7%
Depreciation and amortization 7.5 14.9 (50%)
Asset impairments and other charges - 23.7 n/m
------- -------
Total operating costs and expenses 58.0 81.3 (29%)
------- -------
Operating income (loss) $3.8 $(20.1) n/m
======= =======
Hardware & Managed Services
Revenue
Hardware $21.2 $12.3 72%
Managed services 17.6 14.8 19%
------- -------
Total revenue 38.8 27.1 43%
Operating costs and expenses:
Cost of services and products 30.5 20.3 50%
Selling, general and administrative 5.2 4.1 27%
Depreciation 0.8 0.5 60%
Asset impairments and other charges
(credits) - (0.1) n/m
------- -------
Total operating costs and expenses 36.5 24.8 47%
------- -------
Operating income $2.3 $2.3 (0%)
======= =======
Other
Revenue $19.7 $19.0 4%
Operating costs and expenses:
Cost of services and products 9.1 8.8 3%
Selling, general and administrative 3.5 3.9 (10%)
Depreciation 0.5 0.4 25%
------- -------
Total operating costs and expenses 13.1 13.1 (0%)
------- -------
Operating income $6.6 $5.9 12%
======= =======
Broadband
Revenue $- $- n/m
Costs, expenses, gains and losses:
Selling, general and administrative 0.4 (0.8) n/m
Depreciation - - n/m
Asset impairments and other charges
(credits) 0.1 (0.5) n/m
------- -------
Total costs, expenses, gains and losses 0.5 (1.3) n/m
------- -------
Operating income (loss) $(0.5) $1.3 n/m
======= =======
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(dollars in millions)
Three Months
Ended March 31, %
2006 2005 Change
------- ------- ------
Revenue
Local $186.3 $190.2 (2%)
Wireless 61.8 61.2 1%
Hardware & Managed Services 38.8 27.1 43%
Other 19.7 19.0 4%
Broadband - - n/m
Corporate and eliminations (8.4) (8.9) (6%)
------- -------
Total revenue $298.2 $288.6 3%
======= =======
Cost of Services and Products
Local $58.7 $57.7 2%
Wireless 36.2 29.3 24%
Hardware & Managed Services 30.5 20.3 50%
Other 9.1 8.8 3%
Broadband - - n/m
Corporate and eliminations (6.5) (6.9) (6%)
------- -------
Total cost of services and products $128.0 $109.2 17%
======= =======
Selling, General & Administrative
Local $32.5 $35.4 (8%)
Wireless 14.3 13.4 7%
Hardware & Managed Services 5.2 4.1 27%
Other 3.5 3.9 (10%)
Broadband 0.4 (0.8) n/m
Corporate and eliminations 2.4 2.1 14%
------- -------
Total selling, general & administrative $58.3 $58.1 0%
======= =======
Depreciation and Amortization
Local $25.6 $27.1 (6%)
Wireless 7.5 14.9 (50%)
Hardware & Managed Services 0.8 0.5 60%
Other 0.5 0.4 25%
Broadband - - n/m
Corporate and eliminations - 0.1 n/m
------- -------
Total depreciation and amortization $34.4 $43.0 (20%)
======= =======
Asset Impairments, Shareholder Claim Settlement and
Other Charges (Credits)
Local $- $- n/m
Wireless - 23.7 n/m
Hardware & Managed Services - (0.1) n/m
Other - - n/m
Broadband 0.1 (0.5) n/m
Corporate and eliminations 6.3 - n/m
------- -------
Total asset impairments, shareholder
claim settlement and other charges
(credits) $6.4 $23.1 n/m
======= =======
Operating Income
Local $69.5 $70.0 (1%)
Wireless 3.8 (20.1) n/m
Hardware & Managed Services 2.3 2.3 (0%)
Other 6.6 5.9 12%
Broadband (0.5) 1.3 n/m
Corporate and eliminations (10.6) (4.2) n/m
------- -------
Total operating income $71.1 $55.2 29%
======= =======
Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)
(in thousands)
March 31, December 31,
2006 2005
-------------- -------------
Local access lines 920.9 930.6
DSL subscribers 170.8 162.5
Custom Connections (Super Bundle)
subscribers 155.9 150.3
GSM:
Postpaid wireless subscribers 285.0 251.2
Prepaid wireless subscribers 160.8 148.4
TDMA:
Postpaid wireless subscribers 42.7 63.9
Prepaid wireless subscribers 21.5 32.1
-------------- -------------
Total wireless subscribers 510.0 495.6
============== =============
Consumer long distance lines 408.7 412.6
Business long distance lines 152.6 151.1
-------------- -------------
Total long distance lines 561.3 563.7
============== =============
Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)
(in thousands)
------------------------
2004
------------------------
1Q 2Q 3Q 4Q
------------------------
Local Access Lines
--------------------------------------------
In-Territory:
Primary Residential 611.8 606.3 601.5 592.7
Secondary Residential 56.0 54.0 52.2 50.5
Business/Other 301.5 299.6 298.4 296.6
------------------------
Total In-Territory 969.3 959.9 952.1 939.8
Out-of-Territory:
Primary Residential 4.6 10.9 15.8 18.4
Secondary Residential 0.2 0.6 0.7 0.8
Business/Other 6.8 8.0 9.9 11.1
------------------------
Total Out-of-Territory 11.6 19.5 26.4 30.3
------------------------
Total Access Lines 980.9 979.4 978.5 970.1
========================
Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)
(in thousands)
------------------------ ------
2005 2006
------------------------ ------
1Q 2Q 3Q 4Q 1Q
------------------------ ------
Local Access Lines
--------------------------------------
In-Territory:
Primary Residential 584.2 573.0 563.9 555.7 547.4
Secondary Residential 48.9 47.1 45.4 43.9 42.4
Business/Other 296.1 294.3 292.9 293.3 290.9
------------------------ ------
Total In-Territory 929.2 914.4 902.2 892.9 880.7
Out-of-Territory:
Primary Residential 17.7 18.4 20.5 21.5 22.8
Secondary Residential 0.8 0.9 1.0 1.0 1.1
Business/Other 12.2 12.8 13.9 15.2 16.3
------------------------ ------
Total Out-of-Territory 30.7 32.1 35.4 37.7 40.2
------------------------ ------
Total Access Lines 959.9 946.5 937.6 930.6 920.9
======================== ======
Cincinnati Bell Inc.
Net Debt Calculation
(Unaudited)
(dollars in millions)
Change
March 31, December 31, ------------
2006 2005 $ %
----------- ------------ ------------
Credit facility, revolver $60.0 $- $60.0 n/m
Credit facility, tranche B term
loan 398.0 399.0 (1.0) (0%)
Cincinnati Bell Telephone notes 230.0 230.0 - 0%
7 1/4% Senior Notes due 2013 500.0 500.0 - 0%
7 1/4% Senior Notes due 2023 50.0 50.0 - 0%
8 3/8% Senior Subordinated Notes
due 2014 627.1 633.4 (6.3) (1%)
7% Senior Notes due 2015 242.7 246.4 (3.7) (2%)
Capital leases 21.0 22.2 (1.2) (5%)
Other short-term debt 1.4 2.4 (1.0)(42%)
Other long-term debt 0.2 0.3 (0.1)(33%)
Net unamortized premium 0.9 1.0 (0.1)(10%)
----------- ------------ ------------
Total debt 2,131.3 2,084.7 46.6 2%
Add: Interest rate swap
liability 20.2 10.2 10.0 98%
Less: Cash and cash equivalents (29.0) (25.7) (3.3) 13%
----------- ------------ ------------
Net debt (as defined by the
company) $2,122.5 $2,069.2 $53.3 3%
=========== ============ ============
Credit facility availability $183.7 $243.6 $(59.9)(25%)
=========== ============ ============
Cincinnati Bell Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(dollars in millions)
Three Months
Ended March 31,
2006 2005
------- -------
Cash provided by operating activities $65.2 $64.4
------- -------
Capital expenditures (35.6) (28.0)
Acquisition of remaining minority interest in CBW (83.2) -
Other 1.4 -
------- -------
Cash used in investing activities (117.4) (28.0)
------- -------
Issuance of long-term debt - 352.0
Increase in corporate credit facility, net 60.0 75.0
Repayment of debt (3.3) (440.8)
Debt issuance costs and consent fees - (21.0)
Issuance of common shares - exercise of stock
options 0.6 0.9
Preferred stock dividends paid (2.6) (2.6)
Other 0.8 -
------- -------
Cash provided by (used in) financing activities 55.5 (36.5)
------- -------
Net increase (decrease) in cash and cash equivalents 3.3 (0.1)
Cash and cash equivalents at beginning of period 25.7 24.9
------- -------
Cash and cash equivalents at end of period $29.0 $24.8
======= =======
Reconciliation of GAAP Cash Flow to Free Cash Flow as
defined by the company
Net increase (decrease) in cash and cash equivalents $3.3 $(0.1)
Less adjustments:
Issuance of long-term debt and corporate
credit facility (60.0) (427.0)
Repayment of debt 3.3 440.8
Acquisition of remaining minority interest in CBW 83.2 -
------- -------
Free cash flow (as defined by the company) $29.8 $13.7
======= =======
Income tax refunds / (payments) $(0.5) $0.5
Cincinnati Bell Inc.
Reconciliation of Adjusted EBITDA (Non-GAAP) to
Operating Income (GAAP)
(Unaudited)
(dollars in
millions)
-----------------------------------------------------
Three Months Ended March 31, 2006
-----------------------------------------------------
Total
Local Wireless HMS Other Broadband Corporate Company
----- -------- --- ----- --------- --------- --------
Operating
Income (GAAP) $69.5 $3.8 $2.3 $6.6 $(0.5) $(10.6) $71.1
Add:
Depreciation
and
amortization 25.6 7.5 0.8 0.5 - - 34.4
Asset
impairments,
shareholder
claim
settlement
and other
charges - - - - 0.1 6.3 6.4
-----------------------------------------------------
EBITDA (Non-
GAAP) $95.1 $11.3 $3.1 $7.1 $(0.4) $(4.3) $111.9
=====================================================
-----------------------------------------------------
Three Months Ended March 31, 2005
-----------------------------------------------------
Total
Local Wireless HMS Other Broadband Corporate Company
----- -------- --- ----- --------- --------- --------
Operating
Income (GAAP) $70.0 $(20.1)$2.3 $5.9 $1.3 $(4.2) $55.2
Add:
Depreciation
and
amortization 27.1 14.9 0.5 0.4 - 0.1 43.0
Asset
impairments
and other
charges - 23.7 (0.1) - (0.5) - 23.1
-----------------------------------------------------
EBITDA (Non-
GAAP) $97.1 $18.5 $2.7 $6.3 $0.8 $(4.1) $121.3
=====================================================
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) -
Reconciliation to Reported Results
(Unaudited)
(dollars in millions, except per share amounts)
Special Items
--------------------
Three
Months
Ended
Three March 31,
Months 2006
Ended Before
March 31, Shareholder Income Special
2006 Claim Tax Items
(GAAP) Settlement Expense (Non-GAAP)
----------------------------------------
A B
Revenue $298.2 $- $- $298.2
Costs and expenses
Cost of services and
products 128.0 - - 128.0
Selling, general and
administrative 58.3 - - 58.3
Depreciation and
amortization 34.4 - - 34.4
Shareholder claim
settlement 6.3 (6.3) - -
Asset impairments and
other charges 0.1 - - 0.1
--------- ----------- -------- ---------
Operating income 71.1 6.3 - 77.4
Minority interest expense 0.4 - - 0.4
Interest expense 39.6 - - 39.6
Other income, net (0.1) - - (0.1)
--------- ----------- -------- ---------
Income before income taxes 31.2 6.3 - 37.5
Income tax expense 17.1 2.5 (3.6) 16.0
--------- ----------- -------- ---------
Net income 14.1 3.8 3.6 21.5
Preferred stock dividends 2.6 - - 2.6
--------- ----------- -------- ---------
Net income applicable to
common shareowners $11.5 $3.8 $3.6 $18.9
========= =========== ======== =========
Weighted average diluted
common shares 251.2 251.2 251.2 251.2
========= =========== ======== =========
Diluted earnings per common
share $0.05 $0.02 $0.01 $0.08
========= =========== ======== =========
Normalized results have been adjusted for the following:
(A) Reserve of $6.3 million recorded to cover the Company's
anticipated contribution to the settlement fund, and other
settlement related expenses, for shareholder claim.
(B) Kentucky net operating loss carry- forward write-off due to
regulations issued in first quarter 2006.
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) -
Reconciliation to Reported Results
(Unaudited)
(dollars in millions - except per share amounts)
Special Items
--------------------------------------
Three
Months
Ended
Three March
Months 31,
Ended 2005
March, Asset Before
31, Income Debt Impairments Special
2005 Tax Extinguish- and Other Items
(GAAP) Expense ment Charges (Non-GAAP)
---------------------------------------------------------
A B C
Revenue $288.6 $- $- $- $288.6
Costs and
Expenses
Cost of
services and
products 109.2 - - - 109.2
Selling,
general and
administr-
ative 58.1 - - - 58.1
Depreciation
and
amortization 43.0 - - - 43.0
Asset
impairments
and other
charges 23.1 - - (23.1) -
------- ------- ----------- ----------- -------
Operating
income 55.2 - - 23.1 78.3
Minority
interest
expense
(income) (4.3) - - 4.6 0.3
Interest
expense 50.5 - - - 50.5
Loss on
extinguish-
ment of debt 7.9 - (7.9) - -
Other expense,
net 0.5 - - - 0.5
------- ------- ----------- ----------- -------
Income before
income taxes 0.6 - 7.9 18.5 27.0
Income tax
expense 3.8 (3.4) 3.2 7.4 11.0
------- ------- ----------- ----------- -------
Net income
(loss) (3.2) 3.4 4.7 11.1 16.0
------- ------- ----------- ----------- -------
Preferred
stock
dividends 2.6 - - - 2.6
------- ------- ----------- ----------- -------
Net income
(loss)
applicable to
common
shareowners $(5.8) $3.4 $4.7 $11.1 $13.4
======= ======= =========== =========== =======
Weighted
average
diluted
common shares 245.6 250.8 (1) 250.8 (1) 250.8 (1) 250.8 (1)
======= ======= =========== =========== =======
Diluted
earnings
(loss) per
common share $(0.02) $0.01 $0.02 $0.04 $0.05
======= ======= =========== =========== =======
(1) Shares have been adjusted for dilutive common stock equivalents
that result after excluding the special items from earnings.
Normalized results have been adjusted for the following:
(A) Write-down of certain state deferred tax assets due to change in
future state income tax rates,
(B) Non-cash loss of $7.9 million due to the extinguishment of the
company's prior credit facility, and
(C) Asset impairments and other charges of $23.1 million,
substantially all of which related to a write-down of the
company's TDMA network assets.
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