Customer-care businesses drive Cincinnati Bell's results.

CINCINNATI--(BUSINESS WIRE)--Jan. 23, 1997--Cincinnati Bell Inc. (NYSE:CSN) said today its revenues and net income increased sharply in 1996, with strong results from its rapidly growing customer-care businesses, Cincinnati Bell Information Systems (CBIS) and MATRIXX Marketing.

Cincinnati Bell's 1996 revenues were $1.57 billion, up a record $237.6 million, or 18 percent, from 1995. Cincinnati Bell's fourth-quarter revenues increased 26 percent to a record $432.4 million. Revenues for CBIS and MATRIXX Marketing combined increased 31 percent for the year, and 47 percent for the quarter.

Cincinnati Bell said that its net income was a record $185 million, or $2.70 per share in 1996. Those results include special items that added a net $17.4 million, or 26 cents per share. Excluding those items, Cincinnati Bell's net income for 1996 increased 47 percent to $167.6 million, or $2.44 per share.

Cincinnati Bell's net income for the fourth quarter of 1996 was $51.6 million, or 75 cents per share. That included $6.5 million, or 10 cents per share in special items. Excluding special items in each year, fourth-quarter net income increased 39 percent to $45 million, or 65 cents per share in 1996, from $32.4 million, or 49 cents per share in 1995.

Operating income was $306.5 million in 1996. Excluding special items, operating income was $281.8 million, an increase of 25 percent. Fourth-quarter operating income was $84.5 million, or $74.3 million excluding special items, up 28 percent.

"Our focus on customer care for communications companies has transformed us into a growth company with strong roots in the communications markets we serve," Cincinnati Bell President and Chief Executive Officer John T. LaMacchia said. "Our superb 1996 results are further evidence that our strategy is sound, and that we are executing well."

Settlement gains were the principal special items for the fourth quarter and for all of 1996. Those gains relate to lump-sum pension payouts for telephone employees and others who accepted retirement incentive offers in 1995. Special credits before tax of $13.2 million were included in the fourth quarter and $29.7 million for the year. Fourth quarter operating expenses also included $3 million in acquisition-related charges at CBIS and MATRIXX Marketing.

In 1995, Cincinnati Bell reported a net loss of $32.3 million, or 49 cents per share, including special items. The items included restructuring charges, writeoff of unamortized goodwill, debt refinancing and other non-recurring charges. Excluding those items, Cincinnati Bell's net income for 1995 was $114.2 million, or $1.72 per share.

Operating Highlights

Commenting on Cincinnati Bell's 1996 results, Chief Operating Officer James F. Orr said that all six of the company's businesses are growing and profitable.

"The businesses of Cincinnati Bell are very strong, and have good prospects in each of their markets," Orr said. "Our objective is to continue to leverage our unique set of communications, marketing and information technology skills to deliver comprehensive solutions that will attract new customers and meet or exceed the needs of our existing customers."

Orr noted that results for 1996 included several highlights. They include:

-- CBIS and MATRIXX Marketing together generated 51 percent of Cincinnati Bell's revenues, and 45 percent of its operating income excluding special items in 1996. In the fourth quarter, their combined revenue growth was 47 percent, and combined operating income growth excluding special items was 79 percent.

-- Cincinnati Bell completed four strategic acquisitions in 1996, expanding both the company's customer-care capabilities and its international presence. Excluding acquisitions, Cincinnati Bell's revenues increased approximately 15 percent in 1996.

-- Cincinnati Bell's operating margin, excluding special items, increased to 17.9 percent in 1996 from 16.9 percent in 1995 and from 13.9 percent in 1994.

-- PrimeCo Personal Communications, Sprint Spectrum and Cox Communications each introduced PCS services in selected markets, using customized customer care and billing solutions based on CBIS's Precedent 2000 system. The introduction of Precedent 2000 is a strategic milestone for CBIS as it moves toward global leadership in the provision and management of customer care and billing solutions for the communications industry.

-- Cincinnati Bell's interest expense, excluding special items, declined $16.4 million, or 31 percent, mainly as a result of the company's initiatives to retire high-cost debt in 1995.

All six Cincinnati Bell businesses were profitable in 1996. Their results were as follows: -0-

                            Information Systems

                     4Q96    4Q95   Change     1996    1995   Change
                     ----    ----   ------     ----    ----   ------
Revenues            $133.3  $98.1    36%      $479.8  $373.9   28%
Operating Income     $22.0  $12.3    79%       $78.5   $46.0   71%
(excl. special items)

CBIS had a successful year in 1996 as it sharply expanded its customer care and billing support for key clients in the wireless, cable TV, and wireline communications industries.

Revenues and operating income also benefited from a significant improvement in an international contract.

R&D spending increased to 14 percent of revenues in the fourth quarter of 1996 from 9 percent in the fourth quarter of 1995 as CBIS accelerated the development of several key systems, including its state-of-the-art customer care and billing platform, Precedent 2000.

CBIS's operating margin, excluding $3 million pretax in acquired in-process R&D, increased to 16.4 percent in 1996. Operating margin in 1995, excluding special items, was 12.3 percent.

During the year, CBIS signed new or extended multi-year contracts with key communications-industry clients potentially worth $3 billion. These include contracts for outsourced customer care and billing support with:

-- three major license holders for Personal Communications Services (PCS),

-- three key cellular clients,

-- AT&T, for its re-entry into the market for local telephone services, and

-- several leading cable TV and cable/telephony providers in the U.S. and in Europe.

In November, CBIS acquired Swift Management Services, a U.K. provider of integrated cable/telephony billing services. CBIS earlier acquired assets of ICS Information Technologies, a value-added provider of billing solutions, principally to communications companies in Europe.

                          Marketing Services
                      4Q96    4Q95   Change     1996    1995   Change
                      ----    ----   ------     ----    ----   ------
Revenues            $114.3   $70.3    63%     $367.2  $271.1     35%
Operating Income     $14.4    $8.0    80%      $45.7   $32.3     41%
(excl. special items)

MATRIXX Marketing also had a very successful year in 1996 as it added nearly $100 million in revenues and completed two key acquisitions.

MATRIXX Marketing's outsourced services divisions, which provide value-added dedicated services to key clients in communications, technology, packaged goods and financial services, provided the majority of that revenue growth. MATRIXX sharply expanded its customer service and sales support of clients marketing direct-broadcast satellite entertainment services, and expanded its support of clients in the technology and communications industries.

MATRIXX's operating margin improved to 12.4 percent in 1996, excluding $2 million of in-process R&D. MATRIXX's 1995 operating margin excluding special items was 11.9 percent.

During the quarter, MATRIXX completed the acquisition of Software Support Inc., which provides help-desk support services to computer manufacturers and other high-technology companies. Earlier, MATRIXX Marketing acquired Scherers Communications, a leader in interactive voice response (IVR) technology and services. MATRIXX also recently expanded its relationship with American Express to provide customer support services in Europe.

                           Telephone Operations
                      4Q96    4Q95   Change     1996    1995   Change
                      ----    ----   ------     ----    ----   ------
Revenues            $167.3  $158.2     6%     $650.8  $624.4     4%
Operating Income     $31.1   $29.1     7%     $127.2  $115.7    10%
(excl. special items)

Cincinnati Bell Telephone expanded its role as a full-service provider of communications services in 1996 with the introduction of Internet access and entertainment services, and with innovative promotion of its mass-market calling services under the PhoneGear brand.

Cincinnati Bell Telephone's revenues for local services increased 5 percent as access lines in service increased 4.1 percent to 944,000. The percentage of Cincinnati Bell Telephone customers subscribing to Caller ID and voice messaging services increased sharply. Revenues for network access services increased on a 6 percent increase in total minutes of use, and favorable long-distance settlements. Operating expenses, excluding special items, grew 3 percent.

In December, Cincinnati Bell Telephone proposed a regulatory framework for creating real competition for communications services in Cincinnati, including phasing out local service subsidies and terms for resale of network elements and for interconnection with other networks.

Earlier this month, Cincinnati Bell Telephone learned it was a successful bidder for rights to offer new digital wireless Personal Communications Services (PCS) in the Cincinnati area.

Long Distance, Directory and Supply

Cincinnati Bell's other businesses -- regional long distance, directory services, and equipment resale -- delivered 9 percent of Cincinnati Bell's revenues and 11 percent of operating income. Cincinnati Bell Long Distance and Cincinnati Bell Supply had strong revenue growth. Cincinnati Bell Directory provided good earnings growth. The company's limited partnership investment for cellular telephone service in Ohio and northern Kentucky generated positive returns in 1996.

Cincinnati Bell's shareholders reaped the rewards of the company's growth and earnings strength in 1996, as they did in 1995. Total return (price appreciation plus dividends) to shareholders for 1996 was 80 percent, compared with a total return of 23 percent for the Standard & Poor's 500-Stock Index for 1996.

Cincinnati Bell's two largest shareholders, its Pension Plan Trust and Western and Southern Life Insurance Co., collaborated on a successful secondary offering of 6.8 million Cincinnati Bell common shares and related securities in November. The offering brought increased attention to Cincinnati Bell from institutional investors, who now own about half of the company's shares.

LaMacchia said he anticipates continued good growth in Cincinnati Bell's business in 1997.

"We expect the trend toward convergence in communications to continue and even accelerate," he said. "That should lead to many new and exciting opportunities for all of our businesses, and especially for our customer-care businesses, CBIS and MATRIXX Marketing."

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, as well as the premier provider of communications services in Greater Cincinnati.

                       CINCINNATI BELL INC.
        Revenues, Net Income and Earnings Per Common Share
               In Millions, Except Per Share Amounts
                           (Unaudited)

                 Fourth Quarter Ended December 31

                                        1996        1995     Change
                                       ------      ------    ------
Revenues                              $ 432.4     $ 343.2     26.0%

Income (Loss) Before
 Extraordinary Charge                 $  51.6       (21.5)      -

Extraordinary Charge, net of tax      $              (7.0)      -

Net Income (Loss)                     $  51.6(a)  $ (28.5)(b)   -
                                       ---------   ----------  ---
                                       ---------   ----------  ---
Earnings (Loss) Per Common Share
 Before Extraordinary Charge          $  0.75     $ (0.32)      -

Extraordinary Charge                  $             (0.11)      -

Earnings (Loss) Per Common Share      $  0.75 (a) $ (0.43)(b)   -
                                       ----------   ---------
                                       ----------   ---------
Weighted Average Number
of Common Shares Outstanding (000)     69,043      66,472      3.9%


                     Year Ended December 31
                                        1996        1995     Change
                                       ------      ------    ------
Revenues                             $1,573.7    $1,336.1     17.8%

Income (Loss) Before
 Extraordinary Charge                $  185.0    $  (25.3)      -

Extraordinary Charge, net of tax     $               (7.0)      -

Net Income (Loss)                    $  185.0(a) $  (32.3)(b)   -
                                     ----------  ------------  ---
                                     ----------  ------------  ---
Earnings (Loss) Per Common Share
 Before Extraordinary Charge         $   2.70    $  (0.38)      -

Extraordinary Charge                 $              (0.11)      -

Earnings (Loss) Per Common Share     $   2.70(a) $  (0.49)(b)   -
                                     ----------- ------------  ---
                                     ----------- ------------  ---
Weighted Average Number
of Common Shares Outstanding(000)       68,589      66,271    3.5%

Notes: (a) Results for the fourth quarter and year to date 1996 include

special items of $10.2 million and $27.1 million, respectively,

which increased net income $6.6 million and $17.4 million and

earnings per common share by $0.10 and $0.26.

(b) Results for the fourth quarter and year to date 1995 include

special items of $73.5 million and $208.0 million, respectively,

which reduced net income by $60.9 million and $146.5 million and

earnings per common share by $0.92 and $2.21. -0-

NOTE TO EDITORS: Recent Cincinnati Bell Inc. news releases are available free of charge via fax or the World Wide Web. Call 1-800-345-6301 and press number 3 to obtain news releases via the CBLD Fax Line. Cincinnati Bell's World Wide Web address is www.cinbellinc.com.

CONTACT: Cincinnati Bell Inc.

Wayne Buckhout, 513/397-1081