|
--CyrusOne third quarter revenue increases 20 percent and Adjusted EBITDA increases 19 percent year-over-year
--CyrusOne receives favorable private letter ruling regarding qualification as a real estate investment trust
--Fioptics passes 15,000 new homes during the third quarter and subscribers increase 34 percent year-over-year
Cincinnati Bell Inc. (CBB) today announced financial results for
the third quarter of 2012. For the quarter, revenue was $368 million,
comparable to the third quarter of 2011. Net income of $4 million in the
quarter resulted in diluted earnings per share of 1 cent compared to 7
cents in the third quarter of 2011, due primarily to $6 million of
mark-to-market charges on compensation plans associated with a 53
percent increase in the company’s stock price during the third quarter
of 2012 and an $8 million gain in 2011 on the sale of the company’s home
security business. Adjusted earnings before interest, taxes,
depreciation and amortization(1) (Adjusted EBITDA) for the
third quarter were $130 million, down from $133 million generated in the
same period of 2011, as a result of the mark-to-market charges partially
offset by growth in CyrusOne Adjusted EBITDA.
"Cincinnati Bell delivered strong financial results again this quarter,
building on its performance from the first half of 2012," said Jack
Cassidy, president and chief executive officer. "During the third
quarter, the company achieved its highest stock price in almost five
years, up 88 percent since the beginning of the year."
Highlights
--
Wireline revenue for the quarter was $182 million, comparable to $183
million in the third quarter of 2011, while Adjusted EBITDA of $84
million was down from $87 million generated in the third quarter of
2011 as a result of access line losses. Fioptics entertainment
subscribers increased 34 percent year-over-year to 51,000, which
represents 28 percent of the total 184,000 units passed with Fioptics
at quarter-end.
--
Wireless generated revenue of $60 million and Adjusted EBITDA of $21
million during the quarter, translating into a strong Adjusted EBITDA
margin(2) of 35 percent.
--
For the quarter, CyrusOne revenue of $57 million increased by 20
percent compared to the third quarter of 2011, and its Adjusted EBITDA
increased by 19 percent to $30 million, resulting in an Adjusted
EBITDA margin of 52 percent. At the end of the quarter, the segment
had 896,000 square feet of data center capacity, and utilization was
78 percent.
--
The company received a favorable outcome on its private letter ruling
request with the Internal Revenue Service regarding CyrusOne’s
qualification as a real estate investment trust.
Financial and Operations Review
"The company’s strong third quarter results were led by CyrusOne’s 20
percent increase in revenue and 19 percent increase in Adjusted EBITDA
compared to 2011," said Kurt Freyberger, chief financial officer. "We
were also happy to receive a favorable outcome on our private letter
ruling request regarding CyrusOne’s qualification as a REIT, which
continues our progress toward an IPO of this company."
Wireline Segment
Wireline revenue of $182 million during the quarter was comparable to
$183 million in the third quarter of 2011, as the growth of the
company’s entertainment, data and VoIP product lines continue to offset
the impact of access line losses. Operating income in the quarter
decreased to $51 million from $65 million in the third quarter of 2011,
driven primarily by the $8 million gain from the 2011 sale of the home
security business and the impact of access line losses. Adjusted EBITDA
in the quarter was $84 million compared to $87 million in the third
quarter of 2011, and the segment’s Adjusted EBITDA margin was 46 percent.
During the quarter, the company expanded its Fioptics network to pass
15,000 additional homes and businesses, ending the quarter with a total
of 184,000 units passed. The segment added 5,000 new Fioptics
entertainment and high-speed internet subscribers during the quarter,
increasing the total number of such subscribers to 51,000 and 52,000,
respectively, at the end of the quarter. Total high-speed internet
subscribers at quarter-end increased to 260,000, up from 257,000 at the
end of the second quarter in 2012, as the increase in Fioptics
subscribers was partially offset by a decrease in DSL high-speed
internet subscribers.
Wireless Segment
Wireless revenue for the quarter was $60 million, down from $68 million
in the third quarter of 2011 due to subscriber losses. Despite falling
revenue, continued focus on cost reduction during the quarter provided
operating income of $13 million, up from $12 million in the third
quarter of 2011, while Adjusted EBITDA of $21 million was also up from
$20 million in the third quarter of 2011. As a result, the segment
generated a strong Adjusted EBITDA margin of 35 percent during the
quarter.
Total wireless subscribers at the end of the quarter decreased to
416,000 from 472,000 at the end of the third quarter in 2011. Wireless
ended the quarter with a total of 126,000 smartphone subscribers, up
from 120,000 at the end of the third quarter in 2011. Postpaid
smartphone subscribers at quarter-end represented 38 percent of the
total postpaid subscribers, up from 32 percent at the end of the third
quarter in 2011.
Data Center Colocation Segment
CyrusOne revenue in the quarter grew to $57 million, an increase of $10
million or 20 percent compared to the third quarter in 2011, while the
segment’s operating income of $11 million was comparable to the same
period in 2011. Adjusted EBITDA in the quarter was $30 million, an
increase of 19 percent compared to the third quarter in 2011. During the
quarter, the company completed construction on 95,000 square feet of new
data center space in Dallas, San Antonio, and Houston, increasing
capacity to 896,000 square feet. CyrusOne sold 11,000 square feet of new
space in the third quarter, resulting in quarter-end utilization of 78
percent. The segment’s Adjusted EBITDA margin in the third quarter of 52
percent was comparable to 53 percent in both the third quarter of 2011
and the second quarter in 2012.
IT Services and Hardware Segment
Revenue was $78 million in the quarter compared to $79 million in the
third quarter of 2011, while Adjusted EBITDA and Adjusted EBITDA margin
were both comparable to the same period in 2011 at $6 million and 8
percent, respectively.
2012 Outlook
Cincinnati Bell reaffirms its financial guidance for 2012:
Category 2012 Guidance
----------------------------- -----------------------------
Revenue $1.5 billion
----------------------------- -----------------------------
Adjusted EBITDA Approx. $530 million*
----------------------------- -----------------------------
*Plus or minus 2 percent
Conference Call/Webcast
Cincinnati Bell will host a conference call on October 30, 2012 at 10:00
a.m. (ET) to discuss its results for the third quarter of 2012. A live
webcast of the call will be available via the Investor Relations section
of www.cincinnatibell.com.
The conference call dial-in number is (866) 780-1235. Callers located
outside of the U.S. and Canada may dial (816) 581-1572. A taped replay
of the conference call will be available one hour after the conclusion
of the call until 10:00 a.m. on Tuesday November 13, 2012. For U.S.
callers, the replay will be available at (888) 203-1112. For callers
outside of the U.S. and Canada, the replay will be available at (719)
457-0820. The replay reference number is 6953549. An archived version of
the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.
Safe Harbor Note
This release and the documents incorporated by reference herein contain
forward-looking statements regarding future events and our future
results that are subject to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. All statements, other than
statements of historical facts, are statements that could be deemed
forward-looking statements. These statements are based on current
expectations, estimates, forecasts, and projections about the industries
in which we operate and the beliefs and assumptions of our management.
Words such as "expects," "anticipates," "predicts," "projects,"
"intends," "plans," "believes," "seeks," "estimates," "continues,"
"endeavors," "strives," "may," variations of such words and similar
expressions are intended to identify such forward-looking statements. In
addition, any statements that refer to projections of our future
financial performance, our anticipated growth and trends in our
businesses, and other characterizations of future events or
circumstances are forward-looking statements. Readers are cautioned
these forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties, which could
cause our actual results to differ materially and adversely from those
reflected in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those
discussed in this release and those discussed in other documents we file
with the Securities and Exchange Commission (SEC). More information on
potential risks and uncertainties is available in our recent filings
with the SEC, including Cincinnati Bell’s Form 10-K report, Form 10-Q
reports and Form 8-K reports. Actual results may differ materially and
adversely from those expressed in any forward-looking statements. We
undertake no obligation to revise or update any forward-looking
statements for any reason.
Use of Non-GAAP Financial Measures
This press release contains information about adjusted earnings before
interest, taxes, depreciation and amortization (Adjusted EBITDA),
Adjusted EBITDA margin, free cash flow, net income excluding special
items, and net debt. These are non-GAAP financial measures used by
Cincinnati Bell management when evaluating results of operations and
cash flow. Management believes these measures also provide users of the
financial statements with additional and useful comparisons of current
results of operations and cash flows with past and future periods.
Non-GAAP financial measures should not be construed as being more
important than comparable GAAP measures. Detailed reconciliations of
these non-GAAP financial measures to comparable GAAP financial measures
have been included in the tables distributed with this release and are
available in the Investor Relations section of www.cincinnatibell.com.
(1)Adjusted EBITDA provides a useful measure of
operational performance. The company defines Adjusted EBITDA as GAAP
operating income plus depreciation, amortization, restructuring charges,
asset impairments, components of pension and other retirement plan costs
related to interest costs, asset returns, and amortization of actuarial
gains and losses, and other special items.
(2)Adjusted EBITDA margin provides a useful measure of
operational performance. The company defines Adjusted EBITDA margin as
Adjusted EBITDA divided by revenue. Adjusted EBITDA margin should not be
considered as an alternative to comparable GAAP measures of
profitability and may not be comparable with the measure as defined by
other companies.
Free cash flow provides a useful measure of operational
performance, liquidity and financial health. The company defines free
cash flow as cash provided by (used in) operating, financing and
investing activities, adjusted for the issuance and repayment of debt,
debt issuance costs, the repurchase of common stock, and the proceeds
from the sale or the use of funds from the purchase of business
operations, including transaction costs. Free cash flow should not be
considered as an alternative to net income (loss), operating income
(loss), cash flow from operating activities, or the change in cash on
the balance sheet and may not be comparable with free cash flow as
defined by other companies. Although the company feels that there is no
comparable GAAP measure for free cash flow, the attached financial
information reconciles free cash flow to the net increase (decrease) in
cash and cash equivalents.
Net income excluding special items in total and per share provides
a useful measure of operating performance. Net income excluding special
items should not be considered as an alternative to comparable GAAP
measures of profitability and may not be comparable with net income
excluding special items as defined by other companies.
Net debt provides a useful measure of liquidity and financial
health. The company defines net debt as the sum of the face amount of
short-term and long-term debt and unamortized premium and/or discount,
offset by cash and cash equivalents.
About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell (CBB)
provides integrated communications solutions - including local, long
distance, data, Internet, entertainment and wireless services - that
keep residential and business customers in Greater Cincinnati and Dayton
connected with each other and with the world. In addition, Cincinnati
Bell provides best-in-class data center colocation services to its
enterprise customers through its facilities with fully redundant power
and cooling solutions that are currently located in the Midwest, Texas,
London and Singapore. Complementing the colocation products, Cincinnati
Bell also offers complex information technology solutions like managed
services and technology staffing. For more information, visit www.cincinnatibell.com.
Cincinnati Bell Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2012 2011 $ % 2012 2011 $ %
------------ ------------ ---------- ----- -------------- -------------- ---------- -----
Revenue $ 368.2 $ 368.8 $ (0.6 ) 0% $ 1,099.2 $ 1,097.1 $ 2.1 0%
Costs and expenses
Cost of services and products 172.3 174.6 (2.3 ) (1)% 509.8 502.8 7.0 1%
Selling, general and administrative 72.2 66.5 5.7 9% 199.6 197.7 1.9 1%
Depreciation and amortization 55.4 49.1 6.3 13% 160.2 146.3 13.9 10%
Restructuring charges 0.9 - 0.9 n/m 3.0 - 3.0 n/m
Gain on sale or disposal of assets (0.6 ) (8.4 ) 7.8 93% (0.6 ) (8.4 ) 7.8 93%
Curtailment loss - - - n/m - 4.2 (4.2 ) n/m
Transaction costs 1.7 0.7 1.0 n/m 1.7 2.6 (0.9 ) (35)%
Asset impairments 0.3 - 0.3 n/m 13.3 1.6 11.7 n/m
----- ----- ----- ----- ------- ------- ----- -----
Operating income 66.0 86.3 (20.3 ) (24)% 212.2 250.3 (38.1 ) (15)%
Interest expense 55.2 53.3 1.9 4% 163.3 161.2 2.1 1%
Other expense, net 0.1 - 0.1 n/m 1.6 - 1.6 n/m
----- ----- ----- ----- ------- ------- ----- -----
Income before income taxes 10.7 33.0 (22.3 ) (68)% 47.3 89.1 (41.8 ) (47)%
Income tax expense 6.8 15.4 (8.6 ) (56)% 26.3 40.1 (13.8 ) (34)%
----- ----- ----- - ----- ------- ------- ----- - -----
Net income 3.9 17.6 (13.7 ) (78)% 21.0 49.0 (28.0 ) (57)%
Preferred stock dividends 2.6 2.6 - 0% 7.8 7.8 - 0%
----- ----- ----- ----- ------- ------- ----- -----
Net income applicable to common shareowners $ 1.3 $ 15.0 $ (13.7 ) (91)% $ 13.2 $ 41.2 $ (28.0 ) (68)%
== ===== == ===== = ===== = ===== == ======= == ======= = ===== = =====
Basic earnings per common share $ 0.01 $ 0.08 $ 0.07 $ 0.21
== ===== == ===== == ======= == =======
Diluted earnings per common share $ 0.01 $ 0.07 $ 0.07 $ 0.21
== ===== == ===== == ======= == =======
Weighted average common shares outstanding
(in millions)
--------------------------------------------
- Basic 196.4 196.5 195.8 197.4
- Diluted 205.6 200.6 203.0 200.4
Cincinnati Bell Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except per share amounts)
Three Months Ended
September 30, June 30, Change
2012 2012 $ %
---------------- ----------- ------------ -----
Revenue $ 368.2 $ 368.2 $ - 0%
Costs and expenses
Cost of services and products 172.3 171.7 0.6 0%
Selling, general and administrative 72.2 63.4 8.8 14%
Depreciation and amortization 55.4 53.7 1.7 3%
Restructuring charges 0.9 1.2 (0.3 ) (25)%
Gain on sale or disposal of assets (0.6 ) - (0.6 ) n/m
Transaction costs 1.7 - 1.7 n/m
Asset impairments 0.3 13.0 (12.7 ) (98)%
----- ----- ----- -- -----
Operating income 66.0 65.2 0.8 1%
Interest expense 55.2 53.7 1.5 3%
Other expense, net 0.1 - 0.1 n/m
----- ----- ----- -----
Income before income taxes 10.7 11.5 (0.8 ) (7)%
Income tax expense 6.8 7.0 (0.2 ) (3)%
----- ----- ----- -- -----
Net income 3.9 4.5 (0.6 ) (13)%
Preferred stock dividends 2.6 2.6 - 0%
----- ----- ----- -----
Net income applicable to common shareowners $ 1.3 $ 1.9 $ (0.6 ) (32)%
==== ===== ==== ===== == ===== == =====
Basic and diluted earnings per common share $ 0.01 $ 0.01
==== ===== ==== =====
Weighted average common shares outstanding
(in millions)
--------------------------------------------
- Basic 196.4 195.8
- Diluted 205.6 201.7
Cincinnati Bell Inc.
Income Statements by Segment
(Unaudited)
(Dollars in millions)
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2012 2011 $ % 2012 2011 $ %
---------- -------------- ------------ ------- --------- ------------ ------------ -------
Wireline
Revenue
Voice - local service $ 63.0 $ 69.1 $ (6.1 ) (9 )% $ 193.7 $ 214.1 $ (20.4 ) (10 )%
Data 77.2 73.5 3.7 5 % 229.4 217.3 12.1 6 %
Long distance and VoIP 28.1 28.0 0.1 0 % 86.1 83.3 2.8 3 %
Entertainment 9.5 7.0 2.5 36 % 25.6 19.4 6.2 32 %
Other 4.5 5.1 (0.6 ) (12 )% 13.6 17.7 (4.1 ) (23 )%
----- ----- ----- -- --- -- ----- ----- ----- -- --- --
Total revenue 182.3 182.7 (0.4 ) 0 % 548.4 551.8 (3.4 ) (1 )%
----- ----- ----- -- --- -- ----- ----- ----- -- --- --
Operating costs and expenses
Cost of services and products 71.5 68.7 2.8 4 % 211.5 202.2 9.3 5 %
Selling, general and administrative 32.8 31.6 1.2 4 % 94.0 97.0 (3.0 ) (3 )%
Depreciation and amortization 26.6 25.6 1.0 4 % 78.9 76.1 2.8 4 %
Other* 0.5 (8.4 ) 8.9 106 % 1.2 (3.7 ) 4.9 132 %
----- ----- --- ----- --- -- ----- ----- -- ----- --- --
Total operating costs and expenses 131.4 117.5 13.9 12 % 385.6 371.6 14.0 4 %
----- ----- ----- --- -- ----- ----- ----- --- --
Operating income $ 50.9 $ 65.2 $ (14.3 ) (22 )% $ 162.8 $ 180.2 $ (17.4 ) (10 )%
=== ===== === ===== == ===== == === == == ===== == ===== == ===== == === ==
Wireless
Revenue
Service $ 55.0 $ 62.3 $ (7.3 ) (12 )% $ 171.7 $ 192.0 $ (20.3 ) (11 )%
Equipment 4.5 5.8 (1.3 ) (22 )% 13.3 17.2 (3.9 ) (23 )%
----- ----- ----- -- --- -- ----- ----- ----- -- --- --
Total revenue 59.5 68.1 (8.6 ) (13 )% 185.0 209.2 (24.2 ) (12 )%
----- ----- ----- -- --- -- ----- ----- ----- -- --- --
Operating costs and expenses
Cost of services and products 27.8 34.2 (6.4 ) (19 )% 84.7 98.1 (13.4 ) (14 )%
Selling, general and administrative 11.0 14.3 (3.3 ) (23 )% 32.3 41.8 (9.5 ) (23 )%
Depreciation and amortization 8.1 8.0 0.1 1 % 24.0 25.1 (1.1 ) (4 )%
Other* - - - n/m 0.5 1.1 (0.6 ) (55 )%
----- ----- ----- --- ----- ----- ----- -- --- --
Total operating costs and expenses 46.9 56.5 (9.6 ) (17 )% 141.5 166.1 (24.6 ) (15 )%
----- ----- ----- -- --- -- ----- ----- ----- -- --- --
Operating income $ 12.6 $ 11.6 $ 1.0 9 % $ 43.5 $ 43.1 $ 0.4 1 %
=== ===== === ===== == ===== === == == ===== == ===== == ===== === ==
Data Center Colocation
Revenue $ 56.7 $ 47.1 $ 9.6 20 % $ 163.3 $ 135.6 $ 27.7 20 %
--- ----- --- ----- -- ----- --- -- -- ----- -- ----- -- ----- --- --
Operating costs and expenses
Cost of services 20.0 15.8 4.2 27 % 55.1 43.9 11.2 26 %
Selling, general and administrative 7.1 6.8 0.3 4 % 21.2 17.4 3.8 22 %
Depreciation and amortization 18.3 13.2 5.1 39 % 50.9 38.2 12.7 33 %
Other* 0.1 - 0.1 n/m 13.6 - 13.6 n/m
----- ----- ----- --- ----- ----- ----- ---
Total operating costs and expenses 45.5 35.8 9.7 27 % 140.8 99.5 41.3 42 %
----- ----- ----- --- -- ----- ----- ----- --- --
Operating income $ 11.2 $ 11.3 $ (0.1 ) (1 )% $ 22.5 $ 36.1 $ (13.6 ) (38 )%
=== ===== === ===== == ===== == === == == ===== == ===== == ===== == === ==
IT Services and Hardware
Revenue
Telecom and IT equipment distribution $ 49.5 $ 54.3 $ (4.8 ) (9 )% $ 145.0 $ 156.1 $ (11.1 ) (7 )%
Managed and professional services 28.8 24.6 4.2 17 % 83.8 68.8 15.0 22 %
----- ----- ----- --- -- ----- ----- ----- --- --
Total revenue 78.3 78.9 (0.6 ) (1 )% 228.8 224.9 3.9 2 %
----- ----- ----- -- --- -- ----- ----- ----- --- --
Operating costs and expenses
Cost of services and products 61.3 63.0 (1.7 ) (3 )% 183.3 180.6 2.7 1 %
Selling, general and administrative 10.8 9.7 1.1 11 % 32.0 29.0 3.0 10 %
Depreciation and amortization 2.4 2.2 0.2 9 % 6.3 6.6 (0.3 ) (5 )%
----- ----- ----- --- -- ----- ----- ----- -- --- --
Total operating costs and expenses 74.5 74.9 (0.4 ) (1 )% 221.6 216.2 5.4 2 %
----- ----- ----- -- --- -- ----- ----- ----- --- --
Operating income $ 3.8 $ 4.0 $ (0.2 ) (5 )% $ 7.2 $ 8.7 $ (1.5 ) (17 )%
=== ===== === ===== == ===== == === == == ===== == ===== == ===== == === ==
*Other includes restructuring charges, gain on sale or disposal of
assets, curtailment loss and asset impairments.
Cincinnati Bell Inc.
Income Statements by Segment
(Unaudited)
(Dollars in millions)
Three Months Ended
September 30, June 30, Change
2012 2012 $ %
-------------- -------------- -------------- --------
Wireline
Revenue
Voice - local service $ 63.0 $ 64.7 $ (1.7 ) (3 )%
Data 77.2 76.2 1.0 1 %
Long distance and VoIP 28.1 29.1 (1.0 ) (3 )%
Entertainment 9.5 8.4 1.1 13 %
Other 4.5 5.3 (0.8 ) (15 )%
------ ----- ----- --- --- ---
Total revenue 182.3 183.7 (1.4 ) (1 )%
------ ----- ----- --- --- ---
Operating costs and expenses
Cost of services and products 71.5 71.2 0.3 0 %
Selling, general and administrative 32.8 30.7 2.1 7 %
Depreciation and amortization 26.6 26.4 0.2 1 %
Other* 0.5 0.7 (0.2 ) (29 )%
------ ----- ----- --- --- ---
Total operating costs and expenses 131.4 129.0 2.4 2 %
------ ----- ----- --- ---
Operating income $ 50.9 $ 54.7 $ (3.8 ) (7 )%
====== ====== === ===== === ===== === === ===
Wireless
Revenue
Service $ 55.0 $ 57.6 $ (2.6 ) (5 )%
Equipment 4.5 4.2 0.3 7 %
------ ----- ----- --- ---
Total revenue 59.5 61.8 (2.3 ) (4 )%
------ ----- ----- --- --- ---
Operating costs and expenses
Cost of services and products 27.8 27.4 0.4 1 %
Selling, general and administrative 11.0 10.6 0.4 4 %
Depreciation and amortization 8.1 8.0 0.1 1 %
Other* - - - n/m
------ ----- ----- ---
Total operating costs and expenses 46.9 46.0 0.9 2 %
------ ----- ----- --- ---
Operating income $ 12.6 $ 15.8 $ (3.2 ) (20 )%
====== ====== === ===== === ===== === === ===
Data Center Colocation
Revenue $ 56.7 $ 54.0 $ 2.7 5 %
------ ------ --- ----- --- ----- --- ---
Operating costs and expenses
Cost of services 20.0 17.8 2.2 12 %
Selling, general and administrative 7.1 7.6 (0.5 ) (7 )%
Depreciation and amortization 18.3 17.0 1.3 8 %
Other* 0.1 13.5 (13.4 ) (99 )%
------ ----- ----- --- --- ---
Total operating costs and expenses 45.5 55.9 (10.4 ) (19 )%
------ ----- ----- --- --- ---
Operating income (loss) $ 11.2 $ (1.9 ) $ 13.1 n/m
====== ====== === ===== === === ===== ===
IT Services and Hardware
Revenue
Telecom and IT equipment distribution $ 49.5 $ 49.8 $ (0.3 ) (1 )%
Managed and professional services 28.8 27.5 1.3 5 %
------ ----- ----- --- ---
Total revenue 78.3 77.3 1.0 1 %
------ ----- ----- --- ---
Operating costs and expenses
Cost of services and products 61.3 63.3 (2.0 ) (3 )%
Selling, general and administrative 10.8 10.9 (0.1 ) (1 )%
Depreciation and amortization 2.4 2.3 0.1 4 %
------ ----- ----- --- ---
Total operating costs and expenses 74.5 76.5 (2.0 ) (3 )%
------ ----- ----- --- --- ---
Operating income $ 3.8 $ 0.8 $ 3.0 n/m
====== ====== === ===== === ===== ===
*Other includes restructuring charges, gain on sale or disposal of
assets and asset impairments.
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2012 2011 $ % 2012 2011 $ %
------------ ------------ ------------ ------ -------------- -------------- ------------ -----
Revenue
Wireline $ 182.3 $ 182.7 $ (0.4 ) 0% $ 548.4 $ 551.8 $ (3.4 ) (1)%
Wireless 59.5 68.1 (8.6 ) (13)% 185.0 209.2 (24.2 ) (12)%
Data Center Colocation 56.7 47.1 9.6 20% 163.3 135.6 27.7 20%
IT Services and Hardware 78.3 78.9 (0.6 ) (1)% 228.8 224.9 3.9 2%
Eliminations (8.6 ) (8.0 ) (0.6 ) (8)% (26.3 ) (24.4 ) (1.9 ) (8)%
----- -- ----- -- ----- -- ------ ------- -- ------- -- ----- -- -----
Total revenue $ 368.2 $ 368.8 $ (0.6 ) 0% $ 1,099.2 $ 1,097.1 $ 2.1 0%
== ===== == ===== == ===== == ====== == ======= == ======= == ===== =====
Cost of Services and Products
Wireline $ 71.5 $ 68.7 $ 2.8 4% $ 211.5 $ 202.2 $ 9.3 5%
Wireless 27.8 34.2 (6.4 ) (19)% 84.7 98.1 (13.4 ) (14)%
Data Center Colocation 20.0 15.8 4.2 27% 55.1 43.9 11.2 26%
IT Services and Hardware 61.3 63.0 (1.7 ) (3)% 183.3 180.6 2.7 1%
Eliminations (8.3 ) (7.1 ) (1.2 ) (17)% (24.8 ) (22.0 ) (2.8 ) (13)%
----- -- ----- -- ----- -- ------ ------- -- ------- -- ----- -- -----
Total cost of services and products $ 172.3 $ 174.6 $ (2.3 ) (1)% $ 509.8 $ 502.8 $ 7.0 1%
== ===== == ===== == ===== == ====== == ======= == ======= == ===== =====
Selling, General and Administrative
Wireline $ 32.8 $ 31.6 $ 1.2 4% $ 94.0 $ 97.0 $ (3.0 ) (3)%
Wireless 11.0 14.3 (3.3 ) (23)% 32.3 41.8 (9.5 ) (23)%
Data Center Colocation 7.1 6.8 0.3 4% 21.2 17.4 3.8 22%
IT Services and Hardware 10.8 9.7 1.1 11% 32.0 29.0 3.0 10%
Corporate and eliminations 10.5 4.1 6.4 n/m 20.1 12.5 7.6 61%
----- ----- ----- ------ ------- ------- ----- -----
Total selling, general and administrative $ 72.2 $ 66.5 $ 5.7 9% $ 199.6 $ 197.7 $ 1.9 1%
== ===== == ===== == ===== ====== == ======= == ======= == ===== =====
Depreciation and Amortization
Wireline $ 26.6 $ 25.6 $ 1.0 4% $ 78.9 $ 76.1 $ 2.8 4%
Wireless 8.1 8.0 0.1 1% 24.0 25.1 (1.1 ) (4)%
Data Center Colocation 18.3 13.2 5.1 39% 50.9 38.2 12.7 33%
IT Services and Hardware 2.4 2.2 0.2 9% 6.3 6.6 (0.3 ) (5)%
Corporate - 0.1 (0.1 ) n/m 0.1 0.3 (0.2 ) (67)%
----- ----- ----- -- ------ ------- ------- ----- -- -----
Total depreciation and amortization $ 55.4 $ 49.1 $ 6.3 13% $ 160.2 $ 146.3 $ 13.9 10%
== ===== == ===== == ===== ====== == ======= == ======= == ===== =====
Other*
Wireline $ 0.5 $ (8.4 ) $ 8.9 106% $ 1.2 $ (3.7 ) $ 4.9 132%
Wireless - - - n/m 0.5 1.1 (0.6 ) (55)%
Data Center Colocation 0.1 - 0.1 n/m 13.6 - 13.6 n/m
IT Services and Hardware - - - n/m - - - n/m
Corporate 1.7 0.7 1.0 n/m 2.1 2.6 (0.5 ) (19)%
----- ----- ----- ------ ------- ------- ----- -- -----
Total other $ 2.3 $ (7.7 ) $ 10.0 130% $ 17.4 $ - $ 17.4 n/m
== ===== == ===== == == ===== ====== == ======= == ======= == ===== =====
Operating Income
Wireline $ 50.9 $ 65.2 $ (14.3 ) (22)% $ 162.8 $ 180.2 $ (17.4 ) (10)%
Wireless 12.6 11.6 1.0 9% 43.5 43.1 0.4 1%
Data Center Colocation 11.2 11.3 (0.1 ) (1)% 22.5 36.1 (13.6 ) (38)%
IT Services and Hardware 3.8 4.0 (0.2 ) (5)% 7.2 8.7 (1.5 ) (17)%
Corporate (12.5 ) (5.8 ) (6.7 ) (116)% (23.8 ) (17.8 ) (6.0 ) (34)%
----- -- ----- -- ----- -- ------ ------- -- ------- -- ----- -- -----
Total operating income $ 66.0 $ 86.3 $ (20.3 ) (24)% $ 212.2 $ 250.3 $ (38.1 ) (15)%
== ===== == ===== == ===== == ====== == ======= == ======= == ===== == =====
*Other includes restructuring charges, gain on sale or disposal of
assets, curtailment loss, transaction costs and asset impairments.
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)
Three Months Ended
September 30, June 30, Change
2012 2012 $ %
-------------- -------------- ---------- -----
Revenue
Wireline $ 182.3 $ 183.7 $ (1.4 ) (1)%
Wireless 59.5 61.8 (2.3 ) (4)%
Data Center Colocation 56.7 54.0 2.7 5%
IT Services and Hardware 78.3 77.3 1.0 1%
Eliminations (8.6 ) (8.6 ) - 0%
----- - ----- - ----- -----
Total revenue $ 368.2 $ 368.2 $ - 0%
===== ===== ===== ===== = ===== =====
Cost of Services and Products
Wireline $ 71.5 $ 71.2 $ 0.3 0%
Wireless 27.8 27.4 0.4 1%
Data Center Colocation 20.0 17.8 2.2 12%
IT Services and Hardware 61.3 63.3 (2.0 ) (3)%
Eliminations (8.3 ) (8.0 ) (0.3 ) (4%)
----- - ----- - ----- - -----
Total cost of services and products $ 172.3 $ 171.7 $ 0.6 0%
===== ===== ===== ===== = ===== =====
Selling, General and Administrative
Wireline $ 32.8 $ 30.7 $ 2.1 7%
Wireless 11.0 10.6 0.4 4%
Data Center Colocation 7.1 7.6 (0.5 ) (7)%
IT Services and Hardware 10.8 10.9 (0.1 ) (1)%
Corporate and eliminations 10.5 3.6 6.9 n/m
----- ----- ----- -----
Total selling, general and administrative $ 72.2 $ 63.4 $ 8.8 14%
===== ===== ===== ===== = ===== =====
Depreciation and Amortization
Wireline $ 26.6 $ 26.4 $ 0.2 1%
Wireless 8.1 8.0 0.1 1%
Data Center Colocation 18.3 17.0 1.3 8%
IT Services and Hardware 2.4 2.3 0.1 4%
Corporate - - - n/m
----- ----- ----- -----
Total depreciation and amortization $ 55.4 $ 53.7 $ 1.7 3%
===== ===== ===== ===== = ===== =====
Other*
Wireline $ 0.5 $ 0.7 $ (0.2 ) (29)%
Wireless - - - n/m
Data Center Colocation 0.1 13.5 (13.4 ) (99)%
IT Services and Hardware - - - n/m
Corporate 1.7 - 1.7 n/m
----- ----- ----- -----
Total other $ 2.3 $ 14.2 $ (11.9 ) (84)%
===== ===== ===== ===== = ===== = =====
Operating Income (Loss)
Wireline $ 50.9 $ 54.7 $ (3.8 ) (7)%
Wireless 12.6 15.8 (3.2 ) (20)%
Data Center Colocation 11.2 (1.9 ) 13.1 n/m
IT Services and Hardware 3.8 0.8 3.0 n/m
Corporate (12.5 ) (4.2 ) (8.3 ) n/m
----- - ----- - ----- - -----
Total operating income $ 66.0 $ 65.2 $ 0.8 1%
===== ===== ===== ===== = ===== =====
*Other includes restructuring charges, gain on sale or disposal of
assets, transaction costs and asset impairments.
Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)
(In thousands)
September 30, June 30, September 30,
2012 2012 2011
-------------- ---------- --------------
Local access lines 585.8 598.5 635.3
Long distance lines 426.4 433.6 457.8
High-speed internet subscribers
DSL subscribers 207.8 210.5 221.4
Fioptics subscribers 52.3 47.1 37.3
------- ------- -------
260.1 257.6 258.7
======= ======= =======
Fioptics entertainment subscribers 51.1 46.4 38.0
Wireless
Postpaid wireless subscribers 270.7 284.9 322.2
Prepaid wireless subscribers 144.9 145.2 149.6
------- ------- -------
415.6 430.1 471.8
======= ======= =======
Data Center Colocation
Data center capacity (in square feet) 896,000 801,000 736,000
Utilization rate* 78 % 85 % 86 %
* Data center utilization is calculated by dividing data center square
footage that is committed contractually to customers, if built, by
total data center square footage. Some data center square footage
that is committed contractually may not yet be billed to the
customer.
Cincinnati Bell Inc.
Local Access Line Detail
(Unaudited)
(In thousands)
2010 2011 2012
--------------------------- --------------------------- --------------------
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Local Access Lines
-----------------------------
In-Territory:
Primary Residential 354.1 345.5 336.8 328.9 321.8 313.8 304.8 296.7 288.9 281.7 274.3
Secondary Residential 21.8 20.8 19.3 19.1 18.3 16.3 15.6 14.9 14.2 13.6 13.1
Business/Other 261.9 258.7 256.2 252.5 250.7 248.7 244.4 240.8 238.5 237.5 234.4
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total In-Territory 637.8 625.0 612.3 600.5 590.8 578.8 564.8 552.4 541.6 532.8 521.8
Out-of-Territory:
Primary Residential 32.9 32.5 32.1 31.2 30.4 29.3 27.8 26.7 25.2 24.3 23.3
Secondary Residential 1.1 1.1 1.0 1.0 0.9 0.9 0.9 0.8 0.8 0.8 0.7
Business/Other 39.9 40.4 41.5 41.4 41.5 41.6 41.8 41.4 41.0 40.6 40.0
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Out-of-Territory 73.9 74.0 74.6 73.6 72.8 71.8 70.5 68.9 67.0 65.7 64.0
Total Access Lines 711.7 699.0 686.9 674.1 663.6 650.6 635.3 621.3 608.6 598.5 585.8
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Cincinnati Bell Inc.
Net Debt and Common Shares Outstanding
(Unaudited)
(Dollars and shares in millions)
September 30, June 30, December 31,
2012 2012 2011
------------------ -------------- ------------------
Receivables Facility $ 44.0 $ 19.0 $ -
7% Senior Notes due 2015 249.7 250.0 250.4
8 1/4% Senior Notes due 2017 500.0 500.0 500.0
8 3/4% Senior Subordinated Notes due 2018 625.0 625.0 625.0
8 3/8% Senior Notes due 2020 775.0 775.0 775.0
7 1/4% Senior Notes due 2023 40.0 40.0 40.0
Various Cincinnati Bell Telephone notes 207.5 207.5 207.5
Capital leases and other debt 141.5 143.6 144.4
Net unamortized discount (7.5 ) (7.9 ) (8.7 )
------- ---- ------- -- ------- ----
Total debt 2,575.2 2,552.2 2,533.6
Less: Interest rate swap adjustment (2.2 ) (2.4 ) (2.9 )
Less: Cash and cash equivalents (7.7 ) (4.1 ) (73.7 )
------- ---- ------- -- ------- ----
Net debt (as defined by the company) $ 2,565.3 $ 2,545.7 $ 2,457.0
==== ======= == ======= ==== =======
Credit facility availability $ 210.0 $ 210.0 $ 210.0
==== ======= == ======= ==== =======
Common shares outstanding 199.4 197.4 195.7
======= ======= =======
Cincinnati Bell Inc.
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
(Unaudited)
(Dollars in millions)
Three Months Ended September 30, 2012
--------------------------------------------------------------------------------------------
Wireline Wireless Data Center Colocation IT Services Corporate Total
& Hardware Company
-------- -------- ------------------- ------- ----------- ---------
Net Income (GAAP) $ 3.9
Add:
Income tax expense 6.8
Interest expense 55.2
Other expense, net 0.1
-----
Operating Income (GAAP) $ 50.9 $ 12.6 $ 11.2 $ 3.8 $ (12.5 ) $ 66.0
Add:
Depreciation and amortization 26.6 8.1 18.3 2.4 - 55.4
Restructuring charges 0.9 - - - - 0.9
Gain on sale or disposal of assets (0.4 ) - (0.2 ) - - (0.6 )
Transaction costs - - - - 1.7 1.7
Asset impairments - - 0.3 - - 0.3
Pension and other retirement plan expenses 5.8 - - - 0.4 6.2
---- ---- ----- --- ----- -----
Adjusted EBITDA (Non-GAAP) $ 83.8 $ 20.7 $ 29.6 $ 6.2 $ (10.4 ) $ 129.9
== ==== == ==== ===== ===== == === === ===== === == =====
Adjusted EBITDA Margin 46 % 35 % 52 % 8 % - 35 %
Three Months Ended June 30, 2012
--------------------------------------------------------------------------------------------
Wireline Wireless Data Center Colocation IT Services Corporate Total
& Hardware Company
-------- -------- ------------------- ------- ----------- ---------
Net Income (GAAP) $ 4.5
Add:
Income tax expense 7.0
Interest expense 53.7
-----
Operating Income (Loss) (GAAP) $ 54.7 $ 15.8 $ (1.9 ) $ 0.8 $ (4.2 ) $ 65.2
Add:
Depreciation and amortization 26.4 8.0 17.0 2.3 - 53.7
Restructuring charges 0.7 - 0.5 - - 1.2
Asset impairments - - 13.0 - - 13.0
Legal claim costs - - 0.2 - - 0.2
Pension and other retirement plan expenses 6.0 - - - 0.3 6.3
---- ---- ----- --- ----- -----
Adjusted EBITDA (Non-GAAP) $ 87.8 $ 23.8 $ 28.8 $ 3.1 $ (3.9 ) $ 139.6
== ==== == ==== ===== ===== == === === ===== === == =====
Adjusted EBITDA Margin 48 % 39 % 53 % 4 % - 38 %
Sequential dollar change in Adjusted EBITDA $ (4.0 ) $ (3.1 ) $ 0.8 $ 3.1 $ (6.5 ) $ (9.7 )
Sequential percentage change in Adjusted EBITDA (5 )% (13 )% 3 % 100 % (167 )% (7 )%
Three Months Ended September 30, 2011
--------------------------------------------------------------------------------------------
Wireline Wireless Data Center Colocation IT Services Corporate Total
& Hardware Company
-------- -------- ------------------- ------- ----------- ---------
Net Income (GAAP) $ 17.6
Add:
Income tax expense 15.4
Interest expense 53.3
-----
Operating Income (GAAP) $ 65.2 $ 11.6 $ 11.3 $ 4.0 $ (5.8 ) $ 86.3
Add:
Depreciation and amortization 25.6 8.0 13.2 2.2 0.1 49.1
Gain on sale of assets (8.4 ) - - - - (8.4 )
Transaction costs - - - - 0.7 0.7
Legal claim costs - - 0.4 - - 0.4
Pension and other retirement plan expenses 4.8 - - - 0.3 5.1
---- ---- ----- --- ----- -----
Adjusted EBITDA (Non-GAAP) $ 87.2 $ 19.6 $ 24.9 $ 6.2 $ (4.7 ) $ 133.2
== ==== == ==== ===== ===== == === === ===== === == =====
Adjusted EBITDA Margin 48 % 29 % 53 % 8 % - 36 %
Year-over-year dollar change in Adjusted EBITDA $ (3.4 ) $ 1.1 $ 4.7 $ - $ (5.7 ) $ (3.3 )
Year-over-year percentage change in Adjusted EBITDA (4 )% 6 % 19 % 0 % (121 )% (2 )%
Cincinnati Bell Inc.
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
(Unaudited)
(Dollars in millions)
Nine Months Ended September 30, 2012
-----------------------------------------------------------------------------------
Wireline Wireless Data Center IT Services Corporate Total
Colocation & Company
Hardware
--------- -------- -------- -------- ----------- ---------
Net Income (GAAP) $ 21.0
Add:
Income tax expense 26.3
Interest expense 163.3
Other expense, net 1.6
-----
Operating Income (GAAP) $ 162.8 $ 43.5 $ 22.5 $ 7.2 $ (23.8 ) $ 212.2
Add:
Depreciation and amortization 78.9 24.0 50.9 6.3 0.1 160.2
Restructuring charges 1.6 0.5 0.5 - 0.4 3.0
Gain on sale or disposal of assets (0.4 ) - (0.2 ) - - (0.6 )
Transaction costs - - - - 1.7 1.7
Asset impairments - - 13.3 - - 13.3
Legal claim costs - - 0.2 - - 0.2
Pension and other retirement plan expenses 17.2 - - - 1.1 18.3
----- ---- ---- ---- ----- -----
Adjusted EBITDA (Non-GAAP) $ 260.1 $ 68.0 $ 87.2 $ 13.5 $ (20.5 ) $ 408.3
== ===== == ==== == ==== == ==== === ===== === == =====
Adjusted EBITDA Margin 47 % 37 % 53 % 6 % - 37 %
Nine Months Ended September 30, 2011
-----------------------------------------------------------------------------------
Wireline Wireless Data Center IT Services Corporate Total
Colocation & Hardware Company
--------- -------- -------- -------- ----------- ---------
Net Income (GAAP) $ 49.0
Add:
Income tax expense 40.1
Interest expense 161.2
-----
Operating Income (GAAP) $ 180.2 $ 43.1 $ 36.1 $ 8.7 $ (17.8 ) $ 250.3
Add:
Depreciation and amortization 76.1 25.1 38.2 6.6 0.3 146.3
Gain on sale of assets (8.4 ) - - - - (8.4 )
Transaction costs - - - - 2.6 2.6
Legal claim costs - - 0.4 - - 0.4
Asset impairments 0.5 1.1 - - - 1.6
Pension and other retirement plan expenses 18.9 - - - 1.1 20.0
----- ---- ---- ---- ----- -----
Adjusted EBITDA (Non-GAAP) $ 267.3 $ 69.3 $ 74.7 $ 15.3 $ (13.8 ) $ 412.8
== ===== == ==== == ==== == ==== === ===== === == =====
Adjusted EBITDA Margin 48 % 33 % 55 % 7 % - 38 %
Year-over-year dollar change in Adjusted EBITDA $ (7.2 ) $ (1.3 ) $ 12.5 $ (1.8 ) $ (6.7 ) $ (4.5 )
Year-over-year percentage change in Adjusted EBITDA (3 )% (2 )% 17 % (12 )% (49 )% (1 )%
Cincinnati Bell Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
------------ ------------ ------------- -------------
Cash provided by operating activities $ 63.1 $ 80.6 $ 155.0 $ 198.5
-- ----- -- ----- -- ------ -- ------
Capital expenditures (75.5 ) (74.5 ) (242.9 ) (167.0 )
Proceeds from sale of assets 0.6 9.8 0.6 9.8
Increase in restricted cash (11.1 ) - (11.1 ) -
Release of restricted cash 0.7 - 0.7 -
Other, net - (0.1 ) - (0.3 )
----- ----- -- ------ ------ --
Cash used in investing activities (85.3 ) (64.8 ) (252.7 ) (157.5 )
----- -- ----- -- ------ -- ------ --
Increase in corporate credit and receivables facilities, net 25.0 - 44.0 0.4
Repayment of debt (3.3 ) (2.8 ) (11.3 ) (9.0 )
Debt issuance costs - - - (0.8 )
Dividends paid on preferred stock (2.6 ) (2.6 ) (7.8 ) (7.8 )
Common stock repurchase - (10.0 ) (0.3 ) (10.0 )
Proceeds from exercise of options and warrants 6.6 - 8.1 0.1
Other, net 0.1 0.2 (1.0 ) (0.5 )
----- ----- ------ -- ------ --
Cash provided by (used in) financing activities 25.8 (15.2 ) 31.7 (27.6 )
----- ----- -- ------ ------ --
Net (decrease) increase in cash and cash equivalents 3.6 0.6 (66.0 ) 13.4
Cash and cash equivalents at beginning of period 4.1 90.1 73.7 77.3
----- ----- ------ ------
Cash and cash equivalents at end of period $ 7.7 $ 90.7 $ 7.7 $ 90.7
== ===== == ===== == ====== == ======
Reconciliation of GAAP Cash Flow to Free Cash Flow (as defined
by the company)
Net (decrease) increase in cash and cash equivalents $ 3.6 $ 0.6 $ (66.0 ) $ 13.4
Less adjustments:
Increase in corporate credit and receivables facilities, net (25.0 ) - (44.0 ) (0.4 )
Repayment of debt 3.3 2.8 11.3 9.0
Debt issuance costs - - - 0.8
Proceeds from sale of assets, net of expenses (0.6 ) (9.1 ) (0.6 ) (9.1 )
Transaction costs 1.7 0.7 1.7 2.6
Common stock repurchase - 10.0 0.3 10.0
----- ----- ------ ------
Free cash flow (as defined by the company) $ (17.0 ) $ 5.0 $ (97.3 ) $ 26.3
== ===== == == ===== == ====== == == ======
Income tax payments (refunds) $ 0.4 $ - $ (0.3 ) $ (1.3 )
== ===== == ===== == ====== == == ====== ==
Cincinnati Bell Inc.
Free Cash Flow (as defined by the company)
(Unaudited)
(Dollars in millions)
Free Cash Flow for the three months ended September 30, 2011 $ 5.0
Decrease in Adjusted EBITDA (3.3 )
Increase in capital expenditures (1.0 )
Increase in pension and postretirement payments and contributions (5.6 )
Change in working capital and other (12.1 )
------ -
Free Cash Flow for the three months ended September 30, 2012 $ (17.0 )
= ====== =
Free Cash Flow for the nine months ended September 30, 2011 $ 26.3
Decrease in Adjusted EBITDA (4.5 )
Increase in capital expenditures (75.9 )
Increase in pension and postretirement payments and contributions (4.8 )
Change in working capital and other (38.4 )
------ -
Free Cash Flow for the nine months ended September 30, 2012 $ (97.3 )
= ====== =
Cincinnati Bell Inc.
Capital Expenditures
(Unaudited)
(Dollars in millions)
Three Months Ended
------------------------------------------------------------------------------
Sep. 30, 2012 Jun. 30, 2012 Mar. 31, 2012 Dec. 31, 2011 Sep. 30, 2011
-------------- -------------- -------------- -------------- --------------
Wireline $ 27.8 $ 26.4 $ 23.3 $ 37.4 $ 27.1
Wireless 4.2 1.9 6.3 7.0 4.9
Data Center Colocation 41.6 52.0 52.8 41.3 41.0
IT Services and Hardware 1.9 2.5 2.2 2.8 1.5
------ ------ ------ ------ ------
Total capital expenditures $ 75.5 $ 82.8 $ 84.6 $ 88.5 $ 74.5
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation
to Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)
Three
Three Months Ended
Months Ended September 30, 2012
September 30, 2012 Before Special Items
(GAAP) Special Items (Non-GAAP)
------------------- ---------------- ----------------------
Revenue $ 368.2 $ - $ 368.2
Costs and expenses
Cost of services and products 172.3 - 172.3
Selling, general and administrative 72.2 - 72.2
Depreciation and amortization 55.4 - 55.4
Restructuring charges 0.9 (0.9 ) [A] -
Gain on sale or disposal of assets (0.6 ) 0.6 [B] -
Transaction costs 1.7 (1.7 ) [C] -
Asset impairments 0.3 (0.3 ) [D] -
------ ----- ---- ----------
Operating income 66.0 2.3 68.3
Interest expense 55.2 - 55.2
Other expense, net 0.1 - 0.1
------ ----- ----------
Income before income taxes 10.7 2.3 13.0
Income tax expense 6.8 0.9 7.7
------ ----- ----------
Net income 3.9 1.4 5.3
Preferred stock dividends 2.6 - 2.6
------ ----- ----------
Net income applicable to common shareowners $ 1.3 $ 1.4 $ 2.7
====== ====== ==== ===== ========== ==========
Weighted average diluted common shares 205.6 205.6 205.6
====== ===== ==========
Diluted earnings per common share* $ 0.01 $ 0.01 $ 0.01
====== ====== ==== ===== ========== ==========
Normalized results have been adjusted for the following (pretax
adjustments are tax effected at 40%):
A Restructuring charges consist of severance and lease abandonments.
B Gain on sale of data center and wireline equipment.
C Transaction costs consist of legal and consulting fees incurred in
legal entity restructuring.
D Impairment of intangibles and property recorded to reduce the
carrying values of these assets to reflect their estimated fair
values.
* Diluted earnings per common share have been calculated independently
for the results above. Therefore, the sum of the per share amounts
will not necessarily equal the per share results for the Before
Special Items (Non-GAAP) results.
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation
to Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)
Three
Three Months Ended
Months Ended September 30, 2011
September 30, 2011 Before Special Items
(GAAP) Special Items (Non-GAAP)
------------------- ---------------- ----------------------
Revenue $ 368.8 $ - $ 368.8
Costs and expenses
Cost of services and products 174.6 - 174.6
Selling, general and administrative 66.5 (0.4 ) [A] 66.1
Depreciation and amortization 49.1 - 49.1
Gain on sale of assets (8.4 ) 8.4 [B] -
Transaction costs 0.7 (0.7 ) [C] -
------ ----- ---- ----------
Operating income 86.3 (7.3 ) 79.0
Interest expense 53.3 - 53.3
------ ----- ----------
Income before income taxes 33.0 (7.3 ) 25.7
Income tax expense 15.4 (2.9 ) 12.5
------ ----- ---- ----------
Net income 17.6 (4.4 ) 13.2
Preferred stock dividends 2.6 - 2.6
------ ----- ----------
Net income applicable to common shareowners $ 15.0 $ (4.4 ) $ 10.6
====== ====== ==== ===== ==== ========== ==========
Weighted average diluted common shares 200.6 200.6 200.6
====== ===== ==========
Diluted earnings per common share $ 0.07 $ (0.02 ) $ 0.05
====== ====== ==== ===== ==== ========== ==========
Normalized results have been adjusted for the following (pretax
adjustments are tax effected at 40%):
A Legal claim costs.
B Gain on sale of assets sold in connection with the home security
monitoring business.
C Transaction costs consist of legal and professional fees incurred in
due diligence.
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation
to Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)
Nine
Nine Months Ended
Months Ended September 30, 2012
September 30, 2012 Before Special Items
(GAAP) Special Items (Non-GAAP)
------------------- ---------------- ----------------------
Revenue $ 1,099.2 $ - $ 1,099.2
Costs and expenses
Cost of services and products 509.8 - 509.8
Selling, general and administrative 199.6 (0.2 ) [A] 199.4
Depreciation and amortization 160.2 - 160.2
Restructuring charges 3.0 (3.0 ) [B] -
Gain on sale or disposal of assets (0.6 ) 0.6 [C] -
Transaction costs 1.7 (1.7 ) [D] -
Asset impairments 13.3 (13.3 ) [E] -
------- ----- ---- ----------
Operating income 212.2 17.6 229.8
Interest expense 163.3 - 163.3
Other expense, net 1.6 (1.4 ) [F] 0.2
------- ----- ---- ----------
Income before income taxes 47.3 19.0 66.3
Income tax expense 26.3 7.6 33.9
------- ----- ----------
Net income 21.0 11.4 32.4
Preferred stock dividends 7.8 - 7.8
------- ----- ----------
Net income applicable to common shareowners $ 13.2 $ 11.4 $ 24.6
====== ======= ==== ===== ========== ==========
Weighted average diluted common shares 203.0 203.0 203.0
======= ===== ==========
Diluted earnings per common share* $ 0.07 $ 0.06 $ 0.12
====== ======= ==== ===== ========== ==========
Normalized results have been adjusted for the following (pretax
adjustments are tax effected at 40%):
A
Costs associated with the investigation and resolution of special
legal matters.
B
Restructuring charges consist of severance and lease abandonments.
C
Gain on sale of data center and wireline equipment.
D Transaction costs consist of legal and consulting fees
incurred in legal entity restructuring.
E
Impairment of intangibles and property recorded to reduce the
carrying values of these assets to reflect their estimated fair
values.
F Loss on termination of financing obligation.
*
Diluted earnings per common share have been calculated
independently for the results above. Therefore, the sum of the per
share amounts will not necessarily equal the per share results for
the Before Special Items (Non-GAAP) results.
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation
to Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)
Nine
Nine Months Ended
Months Ended September 30, 2011
September 30, 2011 Before Special Items
(GAAP) Special Items (Non-GAAP)
------------------- ---------------- ----------------------
Revenue $ 1,097.1 $ - $ 1,097.1
Costs and expenses
Cost of services and products 502.8 - 502.8
Selling, general and administrative 197.7 (0.4 ) [A] 197.3
Depreciation and amortization 146.3 - 146.3
Gain on sale of assets (8.4 ) 8.4 [B] -
Curtailment loss 4.2 (4.2 ) [C] -
Transaction costs 2.6 (2.6 ) [D] -
Asset impairments 1.6 (1.6 ) [E] -
------- ----- ---- ----------
Operating income 250.3 0.4 250.7
Interest expense 161.2 - 161.2
------- ----- ----------
Income before income taxes 89.1 0.4 89.5
Income tax expense 40.1 0.2 40.3
------- ----- ----------
Net income 49.0 0.2 49.2
Preferred stock dividends 7.8 - 7.8
------- ----- ----------
Net income applicable to common shareowners $ 41.2 $ 0.2 $ 41.4
====== ======= ==== ===== ========== ==========
Weighted average diluted common shares 200.4 200.4 200.4
======= ===== ==========
Diluted earnings per common share $ 0.21 $ 0.00 $ 0.21
====== ======= ==== ===== ========== ==========
Normalized results have been adjusted for the following (pretax
adjustments are tax effected at 40%):
A Legal claim costs.
B Gain on sale of assets sold in connection with the home security
monitoring business.
C Curtailment of bargained pension plan as a result of pension service
credits being frozen for the majority of the plan participants.
D Transaction costs consist of legal and professional fees incurred in
due diligence.
E Impairment recorded to reduce carrying value of property to reflect
its estimated fair value.
Cincinnati Bell Inc.
Reconciliation of Operating Income (GAAP) Guidance to Adjusted
EBITDA (Non-GAAP) Guidance
(Unaudited)
(Dollars in millions)
2012 Operating Income (GAAP) Guidance $ 273
Add:
Depreciation and amortization 215
Other 5
Pension and other retirement plan expenses 24
Asset impairments 13
-----
2012 Adjusted EBITDA (Non-GAAP) Guidance $ 530 *
= =====
* Plus or minus 2 percent.
SOURCE: Cincinnati Bell Inc.
Cincinnati Bell Inc.
Josh Duckworth, 513-397-2292(Investor/Media)
joshua.duckworth@cinbell.com
|
