Highlights
- Generated Wireline revenue growth for
the first time since 2007 - Fioptics annual revenue exceeded $140
million, up more than 40 percent year-over-year
- Achieved financial guidance (excluding
Wireless) - revenue totaled $1.1 billion and Adjusted EBITDA1 was
$335 million
- Sold 16 million CyrusOne partnership
units for $356 million of cash - proceeds were used to repay debt,
increasing cash flow $15 million annually
- Completed sale of wireless spectrum
licenses for cash proceeds of $194 million
- Produced positive Free cash flow2 for
the year totaling $12 million
Cincinnati Bell Inc. (NYSE:CBB) today announced financial
results for the full year and fourth quarter of 2014 highlighted by
the successful execution of its key initiatives and achieving its
full year financial guidance (excluding Wireless). For the first
time since 2007, the company generated year-over-year Wireline
revenue growth on continued demand for strategic fiber products.
The company also succeeded in its goal of producing positive free
cash flow for the year. In addition, Cincinnati Bell used proceeds
from the sale of its wireless spectrum and the partial monetization
of its investment in CyrusOne to reduce net debt3 by more than $500
million during the year.
"We have made remarkable strides towards transforming Cincinnati
Bell into a growing fiber based entertainment, communications and
IT solutions company," said Ted Torbeck, president and chief
executive officer. "Our results demonstrate this team's ability to
execute on its objectives and provide confidence to accelerate our
fiber investments."
Torbeck also added, "Our efforts in 2015 will be focused on the
efficient deployment of fiber with a renewed emphasis on enhancing
customer experiences to capitalize on our unique market
opportunity."
CONSOLIDATED RESULTS4
Year-to-date consolidated revenue was $1.3 billion, a 3 percent
increase over the prior year as demand for strategic products and
increased hardware sales more than offset declines in Wireless
revenue and legacy products. Strategic revenue totaled $436 million
for the year, up 21 percent compared to a year ago. Fourth quarter
consolidated revenue totaled $308 million, consistent with the
prior year. Adjusted EBITDA for the year was $379 million and $78
million in the fourth quarter. Operating income equaled $116
million and $7 million for the full year and fourth quarter of
2014, respectively. Adjusted EBITDA and operating income were down
from a year ago primarily due to increased costs associated with
preparing to shut-down wireless operations and accelerating our
fiber investments. Net income for the year totaled $76 million,
resulting in diluted earnings per share of $0.31.
SEGMENT RESULTS
Wireline Segment
Wireline strategic revenue totaled $311 million during 2014, up
23 percent over the prior year, as growth from these products
outpaced legacy declines each quarter in 2014.
- Wireline revenue totaled $188 million
for the quarter and $741 million for the full year, up $6 million
and $16 million, respectively, from the same periods in 2013.
- Fioptics revenue increased 40 percent
compared to a year ago, totaling $40 million for the quarter and
$142 million for the year.
- Strategic business revenue totaled $166
million (including $8 million of Fioptics revenue) for the full
year, up 12 percent compared to the prior year. Fourth quarter
strategic revenue for business customers totaled $42 million
(including $2 million of Fioptics revenue).
- Operating income for the quarter was
$36 million, down from $43 million in the same period of 2013. Full
year 2014 operating income was $183 million, down 4 percent
compared to 2013.
- Adjusted EBITDA totaled $74 million and
$318 million, for the fourth quarter and full year of 2014,
respectively. Adjusted EBITDA results were down from a year ago due
to the following: loss of higher margin access lines, costs to
support our fiber acceleration, projects aimed at streamlining
operations and shared service functions, and other one-time
expenses incurred during the fourth quarter.
- Fioptics video subscribers increased by
3,600 in the quarter and 17,200 for the year. Fioptics video
subscribers totaled 91,400, up 23 percent compared to the end of
2013.
- Fioptics internet subscribers totaled
113,700, up more than 40 percent from a year ago. The company added
7,000 new Fioptics internet subscribers in the quarter, and 33,800
for the year.
- In 2014, we passed 59,000 units with
Fioptics. The Fioptics suite of products is now available to
335,000 residential and business customers, more than 40 percent of
Greater Cincinnati.
IT Services and Hardware Segment
Strong enterprise demand for hardware and strategic products
generated year-over-year revenue growth of $89 million and improved
Adjusted EBITDA margins5.
- Revenue for the quarter was $110
million, up $23 million from the fourth quarter of 2013. Full year
revenue was $433 million, up 26 percent compared to the prior year.
- Strategic managed and professional
services revenue was $37 million in the quarter and $139 million
for the full year, both up 17 percent compared to the prior
year.
- Hardware revenue was $71 million for
the quarter, up 32 percent year-over-year. Full year hardware
revenue was $288 million, up 29 percent compared to 2013.
- Operating income totaled $4 million for
the quarter and $20 million for the year, up $2 million and $11
million, respectively, compared to the prior year.
- Adjusted EBITDA for the quarter was $7
million, up $2 million from a year ago. Full year Adjusted EBITDA
totaled $32 million, up 63 percent from the prior year.
Wireless Segment
In the second quarter of 2014 we entered into agreements to sell
our wireless spectrum licenses and certain other assets related to
our wireless business. The agreement to sell our spectrum licenses
closed in the third quarter for cash proceeds totaling $194
million. However, we plan to continue providing wireless service
until no later than April 6, 2015 as we migrate subscribers to
other carriers. At that time, we will transfer certain capital
lease obligations and other assets valued at approximately $25
million.
- Revenue was $17 million for the fourth
quarter and $133 million for the full year.
- Operating losses totaled $26 million
and $66 million for the fourth quarter and full year of 2014,
respectively.
- Fourth quarter Adjusted EBITDA totaled
$2 million and full year Adjusted EBITDA was $44 million.
- At the end of the year we had 82,400
wireless subscribers.
Investment in CyrusOne
Cincinnati Bell effectively owns 44 percent of CyrusOne, which
is reported as an equity method investment, valued at $785 million
as of December 31, 2014.
- Reported revenue of $87 million and
Adjusted EBITDA of $45 million for the fourth quarter of 2014. For
the full year, CyrusOne reported revenue of $331 million and
Adjusted EBITDA of $169 million.
- Announced a 50 percent increase in the
quarterly dividend for the first quarter of 2015 ($0.315 per common
share and equivalent).
- CyrusOne provided 2015 guidance targets
for Revenue and Adjusted EBITDA, indicating expected growth of 14
percent and 12 percent, respectively, at the mid-point of the
range.
2015 Outlook
Cincinnati Bell is providing the following guidance for
2015:
Category 2015
Guidance Revenue $1.1 billion Adjusted EBITDA $297 million*
*Plus or minus 2 percent
Conference Call/Webcast
Cincinnati Bell will host a conference call on February 19 at
10:00 a.m. (ET) to discuss its results for the fourth quarter and
full year of 2014. 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 (888) 287-5563. Callers located outside of the
U.S. and Canada may dial (719) 325-2376. A taped replay of the
conference call will be available one hour after the conclusion of
the call until 10:00 a.m. on Thursday, March 5, 2015. 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
9905311. 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, net debt, net income excluding
special items, and free cash flow. 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.
1Adjusted EBITDA provides a useful measure of operational
performance. The company defines Adjusted EBITDA as GAAP operating
income plus depreciation, amortization, transaction-related
compensation, restructuring charges, (gain) loss on sale or
disposal of assets, transaction costs, curtailment gain, asset
impairments, components of pension and other retirement plan costs
(including interest costs, asset returns, and amortization of
actuarial gains and losses), 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 the
measure as defined by other companies.
CyrusOne defines Adjusted EBITDA as net income (loss) as defined
by U.S. GAAP before noncontrolling interests plus interest expense,
income tax (benefit) expense, depreciation and amortization,
non-cash compensation, transaction costs and transaction-related
compensation, including acquisition pursuit costs, restructuring
costs, loss on extinguishment of debt, asset impairments, (gain)
loss on sale of real estate improvements, and other special items.
Other companies may not calculate Adjusted EBITDA in the same
manner. Accordingly, CyrusOne's Adjusted EBITDA as presented may
not be comparable to others. Detailed reconciliations of CyrusOne's
Adjusted EBITDA to the comparable GAAP financial measure are
available in the Investor Relations section of www.cyrusone.com.
2Free 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.
3Net 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. Net
debt should not be considered as an alternative to comparable GAAP
measures of liquidity and may not be comparable with the measure as
defined by other companies.
4Consolidated Results for the twelve month period ended
December 31, 2013 includes CyrusOne's results of operations from
January 1, 2013 through January 23, 2013. On January 24, 2013, the
Company successfully completed the initial public offering ("IPO")
of CyrusOne and no longer consolidates its results, but accounts
for CyrusOne as an equity method investment. Results referenced
within the Consolidated Results section for the twelve month period
ended December 31, 2013 exclude the operations of CyrusOne for the
period January 1, 2013 through January 23, 2013, to effectively
provide comparative results to 2014. Excluding CyrusOne results for
this period is not consistent with GAAP and should not be
considered as an alternative to comparable GAAP measures of
revenue, operating income, or profitability.
5Adjusted 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.
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.
About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell (NYSE:
CBB) provides integrated communications solutions - including local
and long distance voice, data, high-speed internet and video - that
keep residential and business customers in Greater Cincinnati and
Dayton connected with each other and with the world. In addition,
enterprise customers across the United States rely on CBTS, a
wholly-owned subsidiary, for efficient, scalable office
communications systems and end-to-end IT solutions. Cincinnati Bell
owns approximately 44 percent of CyrusOne (NASDAQ: CONE), which
specializes in highly reliable enterprise-class, carrier-neutral
data center properties. CyrusOne provides mission-critical data
center facilities that protect and ensure the continued operation
of IT infrastructure for more than 665 customers, including 9 of
the Fortune 20 and 144 of the Fortune 1000 companies. For more
information, please visit www.cincinnatibell.com.
Cincinnati Bell Inc. Consolidated Statements of
Operations (Unaudited) (Dollars in millions, except
per share amounts)
Three Months Ended
Twelve Months Ended December 31, Change
December 31, Change 2014 2013 $
% 2014 2013 $ %
Revenue $ 308.3 $ 308.4 $ (0.1 ) 0 % $ 1,278.2 $ 1,256.9 $
21.3 2 %
Costs and expenses Cost of services and
products 183.7 165.8 17.9 11 % 699.1 646.3 52.8 8 % Selling,
general and administrative 55.7 59.4 (3.7 ) (6 )% 223.1 220.8 2.3 1
% Depreciation and amortization 62.4 42.0 20.4 49 % 231.0 169.6
61.4 36 % Restructuring charges 0.5 2.9 (2.4 ) (83 )% 15.9 13.7 2.2
16 % Transaction-related compensation — — — n/m — 42.6 (42.6 ) n/m
Amortization of deferred gain (6.4 ) (1.6 ) (4.8 ) n/m (22.9 ) (3.3
) (19.6 ) n/m Curtailment gain — — — n/m — (0.6 ) 0.6 n/m (Gain)
loss on sale or disposal of assets (0.2 ) (0.2 ) — 0 % (0.3 ) 2.4
(2.7 ) n/m Asset impairments 4.6 — 4.6 n/m 12.1 — 12.1 n/m
Transaction costs 0.7 — 0.7
n/m 4.4 1.6 2.8
n/m Operating income 7.3 40.1 (32.8 ) (82 )% 115.8 163.8
(48.0 ) (29 )% Interest expense 31.9 42.0 (10.1 ) (24 )%
148.7 182.0 (33.3 ) (18 )% Loss on extinguishment of debt 0.2 29.6
(29.4 ) (99 )% 19.6 29.6 (10.0 ) (34 )% Loss from CyrusOne equity
method investment 5.1 2.6 2.5 96 % 7.0 10.7 (3.7 ) (35 )% Gain on
sale of CyrusOne equity method investment — — — n/m (192.8 ) —
(192.8 ) n/m Other (income) expense, net (0.2 ) 0.1
(0.3 ) n/m 0.3 (1.3 ) 1.6
n/m (Loss) income before income taxes (29.7 ) (34.2 )
4.5 (13 )% 133.0 (57.2 ) 190.2 n/m Income tax (benefit) expense
(11.4 ) (6.1 ) (5.3 ) 87 % 57.4
(2.5 ) 59.9 n/m
Net (loss)
income (18.3 ) (28.1 ) 9.8 35 % 75.6 (54.7 ) 130.3 n/m
Preferred stock dividends 2.6 2.6
— 0 % 10.4 10.4 —
0 %
Net (loss) income applicable to common
shareowners $ (20.9 ) $ (30.7 ) $ 9.8 32 % $ 65.2
$ (65.1 ) $ 130.3 n/m
Basic and diluted
(loss) earnings per common share $ (0.10 ) $ (0.15 ) $ 0.31
$ (0.32 )
Weighted average common shares
outstanding
(in
millions)
- Basic 208.7 207.1 208.5 205.9 - Diluted 208.7 207.1 209.6 205.9
Cincinnati Bell Inc. Income Statements by
Segment (Unaudited) (Dollars in millions)
Three Months Ended Twelve Months Ended December
31, Change December 31, Change 2014
2013 $ % 2014 2013 $
% Wireline Revenue Data $ 83.6 $ 80.9 $ 2.7 3 % $
334.9 $ 317.8 $ 17.1 5 % Voice - local service 48.9 54.7 (5.8 ) (11
)% 203.5 229.1 (25.6 ) (11 )% Long distance and VoIP 26.7 26.7 — 0
% 107.3 107.2 0.1 0 % Entertainment 21.1 15.8 5.3 34 % 76.0 55.2
20.8 38 % Other 8.1 4.0 4.1
n/m 19.0 15.5 3.5 23 %
Total revenue 188.4 182.1
6.3 3 % 740.7 724.8 15.9
2 % Operating costs and expenses Cost of services and
products 85.0 73.8 11.2 15 % 306.9 287.2 19.7 7 % Selling, general
and administrative 33.7 33.4 0.3 1 % 131.9 127.8 4.1 3 %
Depreciation and amortization 30.1 28.4 1.7 6 % 115.7 112.2 3.5 3 %
Other* 4.1 3.1 1.0 32 %
3.7 7.4 (3.7 ) (50 )% Total
operating costs and expenses 152.9 138.7
14.2 10 % 558.2 534.6
23.6 4 % Operating income $ 35.5 $ 43.4
$ (7.9 ) (18 )% $ 182.5 $ 190.2 $ (7.7 ) (4 )%
IT Services and Hardware Revenue Telecom and IT equipment
distribution $ 70.7 $ 53.4 $ 17.3 32 % $ 287.7 $ 222.6 $ 65.1 29 %
Managed and professional services 38.8 32.7
6.1 19 % 145.3 121.5
23.8 20 % Total revenue 109.5
86.1 23.4 27 % 433.0
344.1 88.9 26 % Operating costs and
expenses Cost of services and products 90.3 70.3 20.0 28 % 350.0
279.8 70.2 25 % Selling, general and administrative 12.6 10.9 1.7
16 % 51.5 44.6 6.9 15 % Depreciation and amortization 3.1 3.0 0.1 3
% 11.7 10.5 1.2 11 % Other* — —
— 0 % — 0.7 (0.7 ) n/m
Total operating costs and expenses 106.0 84.2
21.8 26 % 413.2 335.6
77.6 23 % Operating income $ 3.5 $ 1.9
$ 1.6 84 % $ 19.8 $ 8.5 $ 11.3 n/m
Wireless Revenue Service $ 15.5 $ 43.1 $ (27.6 ) (64
)% $ 125.1 $ 184.9 $ (59.8 ) (32 )% Equipment 1.3
4.3 (3.0 ) (70 )% 7.7
16.6 (8.9 ) (54 )% Total revenue 16.8
47.4 (30.6 ) (65 )% 132.8
201.5 (68.7 ) (34 )% Operating costs and expenses
Cost of services and products 13.6 28.2 (14.6 ) (52 )% 66.2 101.4
(35.2 ) (35 )% Selling, general and administrative 4.7 11.0 (6.3 )
(57 )% 25.4 40.3 (14.9 ) (37 )% Depreciation and amortization 29.2
10.5 18.7 n/m 103.4 41.2 62.2 n/m Other* (5.2 ) (1.4
) (3.8 ) n/m 4.1 0.4 3.7
n/m Total operating costs and expenses 42.3
48.3 (6.0 ) (12 )% 199.1
183.3 15.8 9 % Operating (loss) income $ (25.5
) $ (0.9 ) $ (24.6 ) n/m $ (66.3 ) $ 18.2 $ (84.5 ) n/m
Data Center Colocation** Revenue $ — $ — $ —
n/m $ — $ 15.6 $ (15.6 ) n/m Operating costs
and expenses Cost of services — — — n/m — 4.8 (4.8 ) n/m Selling,
general and administrative — — — n/m — 2.4 (2.4 ) n/m Depreciation
and amortization — — — n/m — 5.2 (5.2 ) n/m Other* —
— — n/m — —
— n/m Total operating costs and expenses —
— — n/m —
12.4 (12.4 ) n/m Operating income $ — $ —
$ — n/m $ — $ 3.2 $ (3.2 ) n/m * Other
includes restructuring charges, amortization of deferred gain,
curtailment gain, (gain) loss on sale or disposal of assets, asset
impairment and transaction costs. ** Results for 2013 only
include CyrusOne's results through January 23, 2013. Effective
January 24, 2013, the completion date of CyrusOne's IPO, the
company accounts for CyrusOne as an equity method investment, and
therefore does not consolidate the CyrusOne results of operations
in the total company or segment results.
Cincinnati Bell Inc.Segment
Information(Unaudited)(Dollars in millions)
Three
Months Ended Twelve Months Ended December 31,
Change December 31, Change 2014
2013 $ % 2014 2013
$ % Revenue Wireline $ 188.4 $ 182.1 $ 6.3 3 %
$ 740.7 $ 724.8 $ 15.9 2 % IT Services and Hardware 109.5 86.1 23.4
27 % 433.0 344.1 88.9 26 % Wireless 16.8 47.4 (30.6 ) (65 )% 132.8
201.5 (68.7 ) (34 )% Data Center Colocation** — — — n/m — 15.6
(15.6 ) n/m Eliminations (6.4 ) (7.2 ) 0.8
11 % (28.3 ) (29.1 ) 0.8 3 %
Total revenue $ 308.3 $ 308.4 $ (0.1 ) 0 % $
1,278.2 $ 1,256.9 $ 21.3 2 %
Cost of
Services and Products Wireline $ 85.0 $ 73.8 $ 11.2 15 % $
306.9 $ 287.2 $ 19.7 7 % IT Services and Hardware 90.3 70.3 20.0 28
% 350.0 279.8 70.2 25 % Wireless 13.6 28.2 (14.6 ) (52 )% 66.2
101.4 (35.2 ) (35 )% Data Center Colocation** — — — n/m — 4.8 (4.8
) n/m Eliminations (5.2 ) (6.5 ) 1.3 20
% (24.0 ) (26.9 ) 2.9 11 % Total
cost of services and products $ 183.7 $ 165.8 $ 17.9
11 % $ 699.1 $ 646.3 $ 52.8 8 %
Selling, General and Administrative Wireline $ 33.7 $ 33.4 $
0.3 1 % $ 131.9 $ 127.8 $ 4.1 3 % IT Services and Hardware 12.6
10.9 1.7 16 % 51.5 44.6 6.9 15 % Wireless 4.7 11.0 (6.3 ) (57 )%
25.4 40.3 (14.9 ) (37 )% Data Center Colocation** — — — n/m — 2.4
(2.4 ) n/m Corporate and eliminations 4.7 4.1
0.6 15 % 14.3 5.7
8.6 n/m Total selling, general and
administrative $ 55.7 $ 59.4 $ (3.7 ) (6 )% $ 223.1
$ 220.8 $ 2.3 1 %
Depreciation and
Amortization Wireline $ 30.1 $ 28.4 $ 1.7 6 % $ 115.7 $ 112.2 $
3.5 3 % IT Services and Hardware 3.1 3.0 0.1 3 % 11.7 10.5 1.2 11 %
Wireless 29.2 10.5 18.7
n/m
103.4 41.2 62.2 n/m Data Center Colocation** — — — n/m — 5.2 (5.2 )
n/m Corporate — 0.1 (0.1 ) n/m
0.2 0.5 (0.3 ) (60 )%
Total depreciation and amortization $ 62.4 $ 42.0 $
20.4 49 % $ 231.0 $ 169.6 $ 61.4 36 %
Other* Wireline $ 4.1 $ 3.1 $ 1.0 32 % $ 3.7 $ 7.4 $
(3.7 ) (50 )% IT Services and Hardware — — — 0 % — 0.7 (0.7 ) n/m
Wireless (5.2 ) (1.4 ) (3.8 ) n/m 4.1 0.4 3.7 n/m Data Center
Colocation** — — — n/m — — — n/m Corporate 0.3
(0.6 ) 0.9 n/m 1.4 47.9
(46.5 ) (97 )% Total other $ (0.8 ) $ 1.1 $
(1.9 ) n/m $ 9.2 $ 56.4 $ (47.2 ) (84 )%
Operating Income (Loss) Wireline $ 35.5 $ 43.4 $ (7.9 ) (18
)% $ 182.5 $ 190.2 $ (7.7 ) (4 )% IT Services and Hardware 3.5 1.9
1.6 84 % 19.8 8.5 11.3 n/m Wireless (25.5 ) (0.9 ) (24.6 ) n/m
(66.3 ) 18.2 (84.5 ) n/m Data Center Colocation** — — — n/m — 3.2
(3.2 ) n/m Corporate (6.2 ) (4.3 ) (1.9 ) (44
)% (20.2 ) (56.3 ) 36.1 64 %
Total operating income $ 7.3 $ 40.1 $ (32.8 ) (82 )%
$ 115.8 $ 163.8 $ (48.0 ) (29 )% *Other
includes restructuring charges, transaction-related compensation,
amortization of deferred gain, curtailment gain, (gain) loss on
sale or disposal of assets, asset impairments and transaction
costs. ** Results for 2013 only include CyrusOne's results
through January 23, 2013. Effective January 24, 2013, the
completion date of CyrusOne's IPO, the company accounts for
CyrusOne as an equity method investment, and therefore does not
consolidate the CyrusOne results of operations in the total company
or segment results.
Cincinnati Bell Inc. Segment
Metric Information (Unaudited) (In thousands)
December
31, September 30, June 30, March 31,
December 31, 2014 2014 2014 2014
2013 Local access lines Residential 238.3 246.8 255.7
263.5 271.4 Business 242.3 246.0 250.1 255.3 259.3 480.6
492.8 505.8 518.8 530.7 Long distance lines 362.8 371.4
378.6 386.9 394.1 Internet subscribers DSL 156.2 163.8 172.0
178.4 188.5 Fioptics 113.7 106.7 98.3 91.6 79.9 269.9 270.5
270.3 270.0 268.4 Fioptics video subscribers 91.4 87.8 82.5
77.5 74.2 Fioptics units passed 335.0 323.0 307.1 288.0
276.0 Wireless Postpaid wireless subscribers 43.5 101.3
163.4 183.6 197.4 Prepaid wireless subscribers 38.9 75.5 113.3
136.2 142.3 82.4 176.8 276.7 319.8 339.7
Cincinnati Bell Inc. Net Debt and Common Shares
Outstanding (Unaudited) (Dollars and shares in
millions) December 31, December
31, 2014 2013 Corporate Credit Agreement $
— $ 40.0 Receivables Facility 19.2 106.2 8 3/4% Senior Subordinated
Notes due 2018 300.0 625.0 Corporate Credit Agreement - Tranche B
Term Loan 533.2 538.6 8 3/8% Senior Notes due 2020 661.2 683.9 7
1/4% Senior Notes due 2023 40.0 40.0 Various Cincinnati Bell
Telephone notes 134.5 134.5 Capital leases and other debt 99.3
103.3 Net unamortized discount (3.2 ) (6.3 )
Total debt 1,784.2 2,265.2 Less: Cash and cash equivalents
(57.9 ) (4.6 ) Net debt (as defined by the
company) $ 1,726.3 $ 2,260.6 Corporate Credit
Agreement availability: 150.0 160.0 Common shares
outstanding 209.3 208.2
Cincinnati Bell
Inc.Reconciliation of Net (Loss) Income (GAAP) to Adjusted
EBITDA (Non-GAAP)(Unaudited)(Dollars in
millions)
Three Months Ended December 31, 2014 Wireline
IT Services
&Hardware
Wireless Corporate Total
Company
Less: Wireless
Total Company
(excludingWireless)*
Net Loss (GAAP) $ (18.3 ) Add: Income tax benefit (11.4 )
Interest expense 31.9 Loss on extinguishment of debt 0.2 Loss from
CyrusOne equity method investment 5.1
Other income, net
(0.2 )
Operating Income (Loss) (GAAP)
$ 35.5 $ 3.5 $ (25.5 ) $ (6.2 ) $ 7.3 $ (25.5 ) $ 32.8 Add:
Depreciation and amortization 30.1 3.1 29.2 — 62.4 29.2 33.2
Restructuring (reversals) charges (0.3 ) — 0.8 — 0.5 0.8 (0.3 )
Gain on sale or disposal of assets (0.2 ) — — — (0.2 ) — (0.2 )
Transaction costs — — 0.4 0.3 0.7 0.4 0.3 Amortization of deferred
gain — — (6.4 ) — (6.4 ) (6.4 ) — Employee contract terminations —
— — 1.4 1.4 — 1.4 Asset impairment 4.6 — — — 4.6 — 4.6 Spectrum
lease (non-cash) — — 3.2 — 3.2 3.2 — Pension and other retirement
plan expenses 3.9 — —
0.6 4.5 — 4.5
Adjusted EBITDA (Non-GAAP) $ 73.6 $ 6.6
$ 1.7 $ (3.9 ) $ 78.0 $ 1.7 $ 76.3
Adjusted EBITDA Margin 39 % 6 % 10 % — 25 %
Three Months Ended December
31, 2013 Wireline
IT Services
&Hardware
Wireless Corporate Total
Company
Less: Wireless
Total Company
(excludingWireless)*
Net Loss (GAAP) $ (28.1 ) Add: Income tax benefit (6.1 )
Interest expense 42.0 Loss on extinguishment of debt 29.6 Loss from
CyrusOne equity method investment 2.6 Other expense, net 0.1
Operating Income (Loss) (GAAP)
$ 43.4 $ 1.9 $ (0.9 ) $ (4.3 ) $ 40.1 $ (0.9 ) $ 41.0 Add:
Depreciation and amortization 28.4 3.0 10.5 0.1 42.0 10.5 31.5
Restructuring charges (reversals) 3.3 — 0.2 (0.6 ) 2.9 0.2 2.7 Gain
on sale or disposal of assets (0.2 ) — — — (0.2 ) — (0.2 ) Pension
and other retirement plan expenses 4.8 —
— 0.4 5.2 —
5.2
Adjusted EBITDA (Non-GAAP) $
79.7 $ 4.9 $ 9.8 $ (4.4 ) $ 90.0 $ 9.8
$ 80.2
Adjusted EBITDA Margin 44 % 6 %
21 % —
29 %
Year-over-year dollar change in Adjusted EBITDA
$ (6.1 ) $ 1.7 $ (8.1 ) $ 0.5 $ (12.0 )
Year-over-year
percentage change in Adjusted EBITDA (8 )% 35 % (83 )% 11 % (13
)% * Total company (excluding Wireless) does not include any
pro-forma adjustments as described by Regulation S-X: Rule
11-02(b)-2 or consideration of any potential negative synergies.
Cincinnati Bell Inc.
Reconciliation of Net (Loss) Income
(GAAP) to Adjusted EBITDA (Non-GAAP)
(Unaudited) (Dollars in millions)
Twelve Months Ended
December 31, 2014 Wireline
IT Services
&Hardware
Wireless
Data CenterColocation
Corporate Total
Company
Less: Wireless
Total Company(excluding
Wireless)**
Net Income (GAAP) $ 75.6 Add: Income tax expense 57.4
Interest expense 148.7 Loss on extinguishment of debt 19.6 Gain on
sale of CyrusOne equity method investment (192.8 ) Loss from
CyrusOne equity method investment 7.0 Other expense, net 0.3
Operating Income (Loss) (GAAP)
$ 182.5 $ 19.8 $ (66.3 ) $ — $ (20.2 ) $ 115.8 $ (66.3 ) $ 182.1
Add: Depreciation and amortization 115.7 11.7 103.4 — 0.2 231.0
103.4 127.6 Restructuring (reversals) charges (0.5 ) — 16.3 — 0.1
15.9 16.3 (0.4 ) Gain on sale or disposal of assets (0.4 ) — — —
0.1 (0.3 ) — (0.3 ) Transaction costs — — 3.2 — 1.2 4.4 3.2 1.2
Amortization of deferred gain — — (22.9 ) — — (22.9 ) (22.9 ) —
Employee contract termination costs — 0.6 — — 1.4 2.0 — 2.0 Asset
impairment 4.6 — 7.5 — — 12.1 7.5 4.6 Spectrum lease (non-cash) — —
3.2 — — 3.2 3.2 — Pension and other retirement plan expenses
16.0 — — —
2.0 18.0 — 18.0
Adjusted EBITDA (Non-GAAP) $ 317.9 $ 32.1
$ 44.4 $ — $ (15.2 ) $ 379.2 $ 44.4
$ 334.8
Adjusted EBITDA Margin 43 % 7 %
33 % — — 30 %
Twelve
Months Ended December 31, 2013 Wireline
IT Services
&Hardware
Wireless
Data CenterColocation*
Corporate Total
Company
Less: Wireless
Total Company(excluding
Wireless)**
Net Loss (GAAP) $ (54.7 ) Add: Income tax benefit
(2.5 ) Interest expense 182.0 Loss on extinguishment of debt 29.6
Loss from CyrusOne equity method investment 10.7 Other income, net
(1.3 )
Operating Income (GAAP) $ 190.2 $ 8.5 $
18.2 $ 3.2 $ (56.3 ) $ 163.8 $ 18.2 $ 145.6 Add: Depreciation and
amortization 112.2 10.5 41.2 5.2 0.5 169.6 41.2 128.4
Transaction-related compensation — — — — 42.6 42.6 — 42.6
Restructuring charges 9.1 0.7 0.2 — 3.7 13.7 0.2 13.5 (Gain) loss
on sale or disposal of assets (1.1 ) — 3.5 — — 2.4 3.5 (1.1 )
Transaction costs — — — — 1.6 1.6 — 1.6 Curtailment gain (0.6 ) — —
— — (0.6 ) — (0.6 ) Pension and other retirement plan expenses
21.1 — — —
1.4 22.5 — 22.5
Adjusted EBITDA (Non-GAAP) $ 330.9 $
19.7 $ 63.1 $ 8.4 $ (6.5 ) $ 415.6 $
63.1 $ 352.5
Adjusted EBITDA Margin 46
% 6 % 31 % 54 % — 33 %
Year-over-year dollar
change in Adjusted EBITDA $ (13.0 ) $ 12.4 $ (18.7 ) $ (8.4 ) $
(8.7 ) $ (36.4 )
Year-over-year percentage change in
Adjusted EBITDA (4 )% 63 % (30 )% n/m n/m (9 )% *
Results for 2013 only include CyrusOne's results through January
23, 2013. Effective January 24, 2013, the completion date of
CyrusOne's IPO, the company accounts for CyrusOne as an equity
method investment, and therefore does not consolidate the CyrusOne
results of operations in the total company or segment results.
** Total company (excluding Wireless) does not include any
pro-forma adjustments as described by Regulation S-X: Rule
11-02(b)-2 or consideration of any potential negative synergies.
Cincinnati Bell Inc. Consolidated Statements of
Cash Flows (Unaudited) (Dollars in millions)
Three Months Ended
Twelve Months Ended
December 31, December 31, 2014 2013
2014 2013** Cash provided by operating
activities $ 54.4 $ 19.0 $ 175.2 $ 78.8
Capital expenditures (61.2 ) (54.9 ) (182.3 ) (196.9 )
Dividends received from CyrusOne 6.0 7.1 28.4 21.3 Proceeds from
sale of Wireless spectrum licenses — — 194.4 — Proceeds from sale
of assets — 0.2 2.0 2.0 Proceeds from sale of CyrusOne equity
method investment — — 355.9 — Release of restricted cash — — — 0.4
Cash divested from deconsolidation of CyrusOne — — — (12.2 ) Other,
net (0.1 ) — (5.8 ) —
Cash (used in) provided by investing activities (55.3
) (47.6 ) 392.6 (185.4 )
Proceeds from issuance of long-term debt — — — 536.0 (Decrease)
increase in corporate credit and receivables facilities, net (93.2
) 146.2 (127.0 ) 94.2 Repayment of debt (25.9 ) (524.1 ) (376.5 )
(530.8 ) Debt issuance costs (0.9 ) (0.3 ) (0.9 ) (6.7 ) Dividends
paid on preferred stock (2.6 ) (2.6 ) (10.4 ) (10.4 ) Proceeds from
exercise of options and warrants 0.1 0.3 1.3 7.1 Other, net
(0.2 ) — (1.0 ) (1.8 ) Cash
(used in) provided by financing activities (122.7 )
(380.5 ) (514.5 ) 87.6 Net (decrease)
increase in cash and cash equivalents (123.6 ) (409.1 ) 53.3 (19.0
) Cash and cash equivalents at beginning of period 181.5
413.7 4.6 23.6
Cash and cash equivalents at end of period $ 57.9 $
4.6 $ 57.9 $ 4.6
Reconciliation of GAAP Cash Flow to
Free Cash Flow (as defined by the company)
Net (decrease) increase in cash and cash equivalents $ (123.6 ) $
(409.1 ) $ 53.3 $ (19.0 ) Less adjustments: Proceeds from issuance
of long-term debt — — — (536.0 ) (Decrease) increase in corporate
credit and receivables facilities, net 93.2 (146.2 ) 127.0 (94.2 )
Cash divested from deconsolidation of CyrusOne — — — 12.2 Repayment
of debt 25.9 524.1 376.5 530.8 Debt issuance costs 0.9 0.3 0.9 6.7
Transaction-related compensation — — — 42.6 Proceeds from sale of
CyrusOne equity method investment — — (355.9 ) — Proceeds from sale
of Wireless spectrum licenses — — (194.4 ) — Transaction costs
3.2 — 4.4 1.6
Free cash flow (as defined by the company) $ (0.4 ) $
(30.9 ) $ 11.8 $ (55.3 ) Less: CyrusOne's free cash flows*
— — — (3.3 ) Free
cash flow excluding CyrusOne $ (0.4 ) $ (30.9 ) $ 11.8 $
(52.0 ) Income tax payments $ 4.2 $ — $ 9.1
$ 2.8 * CyrusOne's free cash flows for 2013
were comprised of cash generated from operating activities of $4.0
million and cash used in investing activities of $7.3 million.
** Results for 2013 only include CyrusOne's results through
January 23, 2013. Effective January 24, 2013, the completion date
of CyrusOne's IPO, the company accounts for CyrusOne as an equity
method investment, and therefore does not consolidate the CyrusOne
results of operations in the total company or segment results.
Cincinnati Bell Inc. Free Cash Flow (as defined by
the company) (Unaudited) (Dollars in millions)
Free Cash Flow for the
three months ended December 31, 2013 $
(30.9
) Decrease in Adjusted EBITDA (12.0 ) Increase in capital
expenditures (6.3 ) Decrease in interest payments 19.1 Decrease in
pension and postretirement payments and contributions 5.0 Change in
working capital and other 24.7
Free Cash
Flow for the three months ended December 31, 2014 $ (0.4 )
Free Cash Flow for the twelve months ended
December 31, 2013 $ (55.3 ) Less: CyrusOne's free cash flows
for the period ended January 23, 2013 (3.3 )
Free Cash
Flow excluding CyrusOne for the twelve months ended December 31,
2013 $ (52.0 ) Decrease in Adjusted EBITDA (excluding
CyrusOne)* (28.0 ) Decrease in capital expenditures (excluding
CyrusOne)* 6.9 Decrease in interest payments 26.4 Decrease in
pension and postretirement payments and contributions 30.8 Change
in working capital and other 27.7
Free Cash
Flow for the twelve months ended December 31, 2014 $ 11.8
*CyrusOne's Adjusted EBITDA and capital expenditures
totaled $8.4 million and $7.7 million, respectively for the period
January 1, 2013 through January 23, 2013. Effective January 24,
2013, the completion date of CyrusOne's IPO, the company accounts
for CyrusOne as an equity method investment, and therefore does not
consolidate the CyrusOne results of operations in the total company
or segment results.
Cincinnati Bell Inc. Capital
Expenditures (Unaudited) (Dollars in millions)
Three Months
Ended Dec. 31, 2014 Sep. 30, 2014 Jun. 30,
2014 Mar. 31, 2014 Dec. 31, 2013 Wireline
$ 57.6 $ 41.8 $ 38.1 $ 26.2 $ 48.3 IT Services and Hardware 3.4 3.5
2.5 2.5 3.0 Wireless — 0.3 0.6 5.6 3.6 Corporate 0.2
— — — — Total capital expenditures $ 61.2 $
45.6 $ 41.2 $ 34.3 $ 54.9
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 December 31, 2014 December 31, 2014
Before Special Items (GAAP) Special Items
(Non-GAAP) Revenue $ 308.3 $ — $ 308.3
Costs and expenses Cost of services and products 183.7 (3.2
) [A] 180.5 Selling, general and administrative 55.7 (1.4 ) [B]
54.3 Depreciation and amortization 62.4 — 62.4 Restructuring
charges 0.5 (0.5 ) [C] — Amortization of deferred gain (6.4 ) —
(6.4 ) Gain on sale or disposal of assets (0.2 ) 0.2 [D] — Asset
impairments 4.6 (4.6 ) [E] — Transaction costs 0.7
(0.7 ) [F] — Operating income 7.3 10.2 17.5
Interest expense 31.9 — 31.9 Loss on extinguishment of debt
0.2 (0.2 ) — Loss from CyrusOne equity method investment 5.1 — 5.1
Other income, net (0.2 ) — (0.2 )
Loss before income taxes (29.7 ) 10.4 (19.3 ) Income tax
benefit (11.4 ) 4.2 (7.2 )
Net loss (18.3 ) 6.2 (12.1 ) Preferred stock
dividends 2.6 — 2.6
Net loss applicable to common shareowners $ (20.9 ) $
6.2 $ (14.7 )
Weighted average diluted
common shares 208.7 208.7
208.7
Diluted loss per common share* $ (0.10 )
$ 0.03 $ (0.07 )
Normalized results have
been adjusted for the following (pretax adjustments are tax
effected at 40%): A Lease of wireless spectrum
(non-cash) in order to provide wireless service until no later than
April 6, 2015.
B Employee contract termination costs.
C Restructuring charges consist of employee severance
and contract services as we prepare to shut-down wireless
operations.
D Gain on sale of wireline equipment.
E Abandonment of an internal use software project.
F Transaction costs relate to expenses incurred to
sell wireless spectrum licenses and certain other assets.
*
Diluted loss per common share has 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 December
31, 2013 December 31, 2013 Before Special Items
(GAAP) Special Items (Non-GAAP)
Revenue $ 308.4 $ — $ 308.4
Costs and expenses
Cost of services and products 165.8 — 165.8 Selling, general and
administrative 59.4 — 59.4 Depreciation and amortization 42.0 —
42.0 Restructuring charges 2.9 (2.9 ) [A] — Amortization of
deferred gain (1.6 ) — (1.6 ) Gain on sale or disposal of assets
(0.2 ) 0.2 [B] — Operating
income 40.1 2.7 42.8 Interest expense 42.0 — 42.0 Loss on
extinguishment of debt 29.6 (29.6 ) [C] — Loss from CyrusOne equity
method investment 2.6 — 2.6 Other expense, net 0.1
— 0.1 Loss before income taxes
(34.2 ) 32.3 (1.9 ) Income tax (benefit) expense (6.1 )
12.9 6.8
Net loss (28.1 )
19.4 (8.7 ) Preferred stock dividends 2.6
— 2.6
Net loss applicable to
common shareowners $ (30.7 ) $ 19.4 $ (11.3 )
Weighted average diluted common shares 207.1
207.1 207.1
Diluted
loss per common share* $ (0.15 ) $ 0.09 $ (0.05 )
Normalized results have been adjusted for the following
(pretax adjustments are tax effected at 40%): A
Restructuring charges consist of severance and lease abandonment.
B Gain on sale of wireline equipment.
C
Loss on extinguishment of 8 1/4% Senior Notes due 2017 repaid in
full in October 2013. * Diluted loss per common share has
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)
Twelve Twelve Months Ended Months Ended
December 31, 2014 December 31, 2014 Before Special
Items (GAAP) Special Items (Non-GAAP)
Revenue $ 1,278.2 $ — $ 1,278.2
Costs and
expenses Cost of services and products 699.1 (3.2 ) [A] 695.9
Selling, general and administrative 223.1 (2.0 ) [B] 221.1
Depreciation and amortization 231.0 — 231.0 Restructuring charges
15.9 (15.9 ) [C] — Amortization of deferred gain (22.9 ) — (22.9 )
Gain on sale or disposal of assets (0.3 ) 0.3 [D] — Asset
impairments 12.1 (12.1 ) [E] — Transaction costs 4.4
(4.4 ) [F] — Operating income 115.8 37.3 153.1
Interest expense 148.7 — 148.7 Loss on extinguishment of
debt 19.6 (19.6 ) [G] — Loss from CyrusOne equity method investment
7.0 — 7.0 Gain on sale of CyrusOne equity method investment (192.8
) 192.8 [H] — Other expense, net 0.3 —
0.3 Income (loss) before income taxes 133.0
(135.9 ) (2.9 ) Income tax expense 57.4 (54.4
) 3.0
Net income (loss) 75.6 (81.5 )
(5.9 ) Preferred stock dividends 10.4 —
10.4
Net income (loss) applicable to
common shareowners $ 65.2 $ (81.5 ) $ (16.3 )
Weighted average diluted common shares 209.6
208.5 [I] 208.5
Diluted earnings (loss) per common share* $ 0.31 $
(0.39 ) $ (0.08 )
Normalized results have been
adjusted for the following (pretax adjustments are tax effected at
40%): A Lease of wireless spectrum (non-cash) in
order to provide wireless service until no later than April 6,
2015.
B Employee contract termination costs.
C Restructuring charges consist of employee severance and
contract terminations as we prepare to shut-down wireless
operations. Employee severance also includes costs associated with
outsourcing portions of our IT department.
D Gain on
sale of wireline equipment.
E Asset impairment
relates to wireless network upgrades abandoned in conjunction with
the close of the agreement to sell wireless spectrum licenses and
the abandonment of an internal use software project.
F Transaction costs relate to expenses incurred to sell
wireless spectrum licenses and certain other assets.
G Loss on extinguishment of debt related to the redemption
of $325.0 million 8 3/4% Senior Subordinated Notes due 2018 on
August 8, 2014 at a redemption rate of 104.375% and due to $22.7
million of the outstanding 8 3/8% Senior Notes due 2020 redeemed on
October 1, 2014 at par.
H Gain on sale of CyrusOne
equity method investment.
I Dilutive effect of common
stock equivalents based on net income (loss) excluding special
items.
* Diluted earnings (loss) 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)
Twelve Twelve Months Ended Months Ended
December 31, 2013 December 31, 2013 Before Special
Items (GAAP) Special Items (Non-GAAP)
Revenue $ 1,256.9 $ — $ 1,256.9
Costs and
expenses Cost of services and products 646.3 — 646.3 Selling,
general and administrative 220.8 — 220.8 Depreciation and
amortization 169.6 (8.5 ) [A] 161.1 Restructuring charges 13.7
(13.7 ) [B] — Amortization of deferred gain (3.3 ) — (3.3 )
Transaction-related compensation 42.6 (42.6 ) [C] — Curtailment
gain (0.6 ) 0.6 [D] — Loss on sale or disposal of assets 2.4 (2.4 )
[E] — Transaction costs 1.6 (1.6 ) [F]
— Operating income 163.8 68.2 232.0 Interest expense
182.0 0.3 [G] 182.3 Loss on extinguishment of debt 29.6 (29.6 ) [H]
— Loss from CyrusOne equity method investment 10.7 — 10.7 Other
income, net (1.3 ) 1.1 [G] (0.2 )
(Loss) income before income taxes (57.2 ) 96.4 39.2 Income
tax (benefit) expense (2.5 ) 27.9 [I]
25.4
Net (loss) income (54.7 ) 68.5 13.8
Preferred stock dividends 10.4 —
10.4
Net (loss) income applicable to common
shareowners $ (65.1 ) $ 68.5 $ 3.4
Weighted average diluted common shares 205.9
208.4 [J] 208.4
Diluted
(loss) earnings per common share* $ (0.32 ) $ 0.33 $
0.02
Normalized results have been adjusted
for the following (pretax adjustments are tax effected at 40%):
A Increased depreciation due to one-time charge
associated with a change in estimated useful lives assigned to
wireless network software.
B Restructuring charges
consist of lease abandonments, severance and the termination of a
distributor agreement.
C Transaction-related
compensation represents incentives related to the completion of
CyrusOne's initial public offering.
D Curtailment
gain resulted from elimination of future pension service credits in
the management pension plan.
E Loss on sale or
disposal of wireline and wireless network equipment.
F Transaction costs relate to expenses incurred for
exploring strategic alternatives for our Wireless business and
legal and consulting costs associated with CyrusOne.
G Use tax refund from assets previously disposed.
H Loss on extinguishment of 8 1/4% Senior Notes due 2017
repaid in full in October 2013.
I Tax effect of above
adjustments at 40%, partially offset by a gross valuation allowance
provision of $10.7 million for Texas margin tax credits.
J Dilutive effect of common stock equivalents based on net
income excluding special items.
* Diluted (loss)
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.
Operating Income excluding CyrusOne (Unaudited)
(Dollars in millions)
For the twelve months ended December 31, 2013
Cincinnati Bell Data Center Cincinnati
Bell including CyrusOne Colocation Other
excluding CyrusOne Revenue $ 1,256.9 $ (15.6 ) $ 0.4
[A] $ 1,241.7 Costs and expenses Cost of services and
products 646.3 (4.8 ) 0.4 [A] 641.9 Selling, general and
administrative 220.8 (2.4 ) — 218.4 Depreciation and amortization
169.6 (5.2 ) — 164.4 Restructuring charges 13.7 — — 13.7
Amortization of deferred gain (3.3 ) — — (3.3 ) Transaction-related
compensation 42.6 — (20.0 ) [B] 22.6 Curtailment gain (0.6 ) — —
(0.6 ) Loss on sale or disposal of assets, net 2.4 — — 2.4
Transaction costs 1.6 — (0.4 )
[C] 1.2 Operating income $ 163.8 $ (3.2 ) $
20.4 $ 181.0
A Represents
intersegment transactions.
B Transaction-related
compensation paid to CyrusOne related to CyrusOne employees.
C Transaction costs related to the CyrusOne IPO.
Cincinnati Bell Inc. Reconciliation of Operating Income
(GAAP) Guidance to Adjusted EBITDA (Non-GAAP) Guidance
(Unaudited) (Dollars in millions)
2015 Operating Income (GAAP)
Guidance $ 132 Add: Depreciation and amortization
145 Restructuring 5 Pension and other retirement plan expenses
15
2015 Adjusted EBITDA (Non-GAAP) Guidance
Range $ 297
*
* Plus or minus 2 percent.
Cincinnati Bell Inc.Investor contact:Josh
Duckworth, 513-397-2292Joshua.Duckworth@cinbell.comorMedia
contact:Jane Weiler,
513-397-9941Jane.Weiler@cinbell.com
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