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Cincinnati Bell Inc. Reports Revenue and Earnings Growth in Third Quarter of 2007

11/02/07
Wireless and Technology Solutions Growth Drives Quarterly Increase
CINCINNATI, Nov 02, 2007 (BUSINESS WIRE) -- Cincinnati Bell Inc. (NYSE:CBB) today announced financial results for the third quarter of 2007, which included year-over-year and sequential growth in both revenue and earnings. For the third quarter 2007, revenue totaled $344 million, an increase of 8 percent year-over-year, with operating income of $83 million. Net income was $26 million, or 9 cents per diluted share. Excluding special items(1), quarterly net income and earnings per share both increased 5 percent compared to last year. Adjusted earnings before interest, taxes, depreciation and amortization(2) (EBITDA) equaled $120 million, up $2 million, or 2 percent from a year ago.

"The momentum generated in Cincinnati Bell's key growth areas of Wireless, Technology Solutions and DSL led to the eighth consecutive quarter of year-over-year revenue growth. In addition, adjusted EBITDA in our core operations(3) has increased the last five quarters," said Jack Cassidy, president and chief executive officer of Cincinnati Bell Inc. "By introducing new products and developing previously underserved markets, Cincinnati Bell continues to meet customer demands for value and convenience, superior network quality and outstanding service."

Third Quarter Highlights

  • Quarterly revenue increased 8 percent or $24 million from a year ago driven by $13 million of service and $11 million of equipment revenue growth. Increased revenue from Technology Solutions, Wireless, Wireline data, and long distance more than offset a decline in Wireline voice revenue.
  • The Technology Solutions segment produced quarterly revenue of $74 million, up 29 percent from a year ago, representing growth in all areas of the business. Operating income totaled $6 million, up 10 percent from the third quarter of 2006 and adjusted EBITDA grew by 25 percent to a record $8 million.
  • Wireless service revenue in the third quarter was $68 million, up $9 million or 15 percent from a year ago reflecting year-over-year subscriber growth of 10 percent. Operating income of $9 million increased 43 percent and Wireless adjusted EBITDA margin expanded 4 points from the third quarter of 2006 to 25 percent.
  • Wireline operating income in the quarter increased 6 percent year-over-year while adjusted EBITDA of $99 million remained flat compared to the prior year. This is a direct result of data revenue growth, expense reductions, as well as long distance and expansion markets growth. These efforts offset the impact of local voice revenue decline.
  • Year-over-year DSL subscriber growth equaled 16 percent and penetration of in-territory consumer primary access lines reached 40 percent, up 9 percentage points.
  • Capital expenditures were $62 million in the quarter driven largely by data center expansion of which the company commissioned 24 thousand square feet of raised floor space during the third quarter. Net debt(4) increased by $12 million from the second quarter to total $1.972 billion at the end of the third quarter.

"We are pleased with the financial performance in each of our business segments," said Brian Ross, chief financial officer of Cincinnati Bell Inc. "We produced revenue, EBITDA and subscriber growth, while continuing to invest in the expansion of our data center business and new 3G wireless network."

Wireline Segment

Wireline segment revenue was $202 million, comparable to the third quarter of 2006. Increased data, long distance and expansion market voice revenue largely offset lower local voice revenue in the company's traditional operating area. Operating income totaled $73 million compared with $69 million in the third quarter of 2006, which included a restructuring charge related to the outsourcing of supply chain management functions. Adjusted EBITDA for the Wireline segment totaled $99 million, comparable to a year ago and up 1 percent sequentially. Year-over-year total access line loss in the third quarter was 5.8 percent. Expansion market access lines grew 27 percent, which helped to offset the loss of in-territory consumer access lines.

Wireless Services

Quarterly revenue from the Wireless segment increased 16 percent to $75 million and operating income equaled $9 million, up $3 million from a year ago, primarily due to a $9 million, or 15%, increase in service revenue. Adjusted EBITDA was $19 million, up $5 million compared with the third quarter of 2006, while adjusted EBITDA margin expanded 4 points to 25 percent.

In the third quarter, postpaid net activations were 8,000 compared with 11,000 in the prior year. Postpaid churn remained low at 1.67 percent compared to 1.73 percent a year ago. Quarterly postpaid average revenue per user (ARPU) totaled $47.41. Prepaid net activations improved by 9,000 and prepaid ARPU of $22.96 increased 18 percent year-over-year.

Technology Solutions

Technology Solutions revenue was $74 million, up 29 percent from a year ago. Telecommunications and IT Equipment revenue increased $10 million or 24 percent from the prior year while Data Center and Managed Services revenue grew $6 million, a 44 percent increase compared to the third quarter of 2006. Operating income totaled $6 million, up 10 percent from a year ago, due to Data Center and Managed Services growth partially offset by increased depreciation to support the expanded data center operations. Adjusted EBITDA was a record $8 million, up 25 percent from the third quarter of 2006.

With the commissioning of 24,000 square feet, billable data center capacity increased by 22 percent to 135,000 square feet compared to the end of the second quarter of 2007. Utilization of this billable capacity was 84 percent at the end of the third quarter. Approximately 41,000 square feet of new data center capacity remains under construction, which the company expects to complete by the end of the first quarter of 2008.

2007 Guidance

Cincinnati Bell is updating its 2007 guidance estimates by increasing adjusted EBITDA by $5 million to approximately $470 million. 2007 estimates are as follows:

            Category                          2007 Guidance
----------------------------------------------------------------------
Revenue                                Approximately $1.3 billion
----------------------------------------------------------------------
Adjusted EBITDA                        Approximately $470 million
----------------------------------------------------------------------
Capital Expenditures               Approximately 19 percent of revenue
----------------------------------------------------------------------
Free Cash Flow(5)                       Approximately $50 million
----------------------------------------------------------------------

Conference Call/Webcast

Cincinnati Bell will host a conference call today at 10:00 a.m. (ET) to discuss its results for the third quarter of 2007. 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 866.278.7926. International callers may dial 904.596.2360. A taped replay call will be available one hour after the conclusion of the teleconference until 5:00 p.m. (ET) on November 16, 2007. For U.S. callers, the replay will be available at 888.284.7564. For international callers, the replay will be available at 904.596.3174. The replay reference number is 222038. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.

Safe Harbor Note

Certain of the statements and predictions contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In particular, statements, projections or estimates that include or reference the words "believes," "anticipates," "plans," "intends," "expects," "will," or any similar expression fall within the safe harbor for forward-looking statements contained in the Reform Act. Actual results or outcomes may differ materially from those indicated or suggested by any such forward-looking statement for a variety of reasons, including, but not limited to: Cincinnati Bell's ability to maintain its market position in communications services, including wireless, wireline and internet services; general economic trends affecting the purchase or supply of telecommunication services; world and national events that may affect the ability to provide services; changes in the regulatory environment; any rulings, orders or decrees that may be issued by any court or arbitrator; restrictions imposed under various credit facilities and debt instruments; work stoppages caused by labor disputes; and Cincinnati Bell's ability to develop and launch new products and services. More information on potential risks and uncertainties is available in recent filings with the Securities and Exchange Commission, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. The forward-looking statements included in this release represent company estimates as of November 2, 2007. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.

Use of Non-GAAP Financial Measures

This press release contains information about net income excluding special items, free cash flow, net debt and adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA). These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of net income excluding special items, adjusted EBITDA, net debt and free cash flow 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)Net income excluding special items 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.

(2)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 and other special items. Adjusted EBITDA should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with adjusted EBITDA as defined by other companies.

(3)Core operations represents the company's three reportable segments: Wireline, Wireless, and Technology Solutions.

(4)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.

(5)Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as SFAS 95 cash provided by (used in) operating, financing and investing activities, adjusted for the issuance and repayment of debt and for the proceeds from the sale or the use of funds from the purchase of business operations. 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.

About Cincinnati Bell Inc.

Cincinnati Bell Inc. (NYSE:CBB) is parent to one of the nation's most-respected and best-performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. With headquarters in Cincinnati, Ohio, Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. For more information, visit www.cincinnatibell.com.

Cincinnati Bell Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars in millions, except per share amounts)


                    Three Months                Nine Months
                 Ended September 30,   %    Ended September 30,   %
                  2007      2006     Change  2007      2006     Change
                 ------- ----------- ------ ------- ----------- ------

 Revenue         $344.3      $320.1     8%  $988.6  $941.7         5%

 Costs and
  expenses
  Cost of
   services and
   products       159.0       142.9    11%   437.5   416.5         5%
  Selling,
   general and
   administrative  65.3        59.5    10%   196.6   179.6         9%
  Depreciation
   and
   amortization    37.7        35.6     6%   110.8   105.6         5%
  Shareholder
   claim
   settlement         -           -   n/m        -     6.3      (100%)
  Restructuring
   charges
   (gains)         (0.3)        3.3  (109%)    2.3     3.5       (34%)
  Gain on sale of
   broadband
   assets             -        (4.7) (100%)      -    (7.6)     (100%)
                 ------- -----------        ------- -----------

   Operating
    income         82.6        83.5    (1%)  241.4   237.8         2%

 Minority
  interest
  expense
  (income)            -        (0.2) (100%)      -     0.1      (100%)
 Interest expense  38.0        41.4    (8%)  117.1   121.3        (3%)
 Other expense
  (income), net     0.2        (0.1)  n/m     (2.1)   (0.4)      n/m
                 ------- -----------        ------- -----------

 Income before
  income taxes     44.4        42.4     5%   126.4   116.8         8%
 Income tax
  expense          18.7        17.3     8%    54.0    53.2         2%
                 ------- -----------        ------- -----------

 Net income        25.7        25.1     2%    72.4    63.6        14%

 Preferred stock
  dividends         2.6         2.6     0%     7.8     7.8         0%
                 ------- -----------        ------- -----------

 Net income
  applicable to
  common
  shareowners     $23.1       $22.5     3%   $64.6   $55.8        16%
                 ======= ===========        ======= ===========


 Basic earnings
  per common
  share           $0.09       $0.09          $0.26   $0.23
                 ======= ===========        ======= ===========

 Diluted earnings
  per common
  share           $0.09       $0.09          $0.25   $0.22
                 ======= ===========        ======= ===========

 Weighted average
  common shares
  outstanding
  (millions)
  - Basic         247.6       247.1          247.3   246.8
  - Diluted       257.2       254.4          256.6   252.7

Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)


                   Three Months                 Nine Months
                Ended September 30,    %    Ended September 30,   %
                 2007      2006     Change   2007      2006     Change
                ------- ----------- ------- ------ ------------ ------
Wireline
Revenue
 Voice - local
  service       $105.8       $115.2    (8%) $328.7       $350.6  (6%)
 Data             65.8         60.7     8%   191.8        176.1   9%
 Long distance    19.8         18.0    10%    58.3         54.0   8%
 Other            10.6          8.6    23%    31.0         27.2  14%
                ------- -----------         ------ ------------

 Total revenue   202.0        202.5     0%   609.8        607.9   0%

Operating costs
 and expenses
 Cost of
  services and
  products        66.0         65.9     0%   199.0        194.9   2%
 Selling,
  general and
  administrative  37.1         37.7    (2%)  113.5        108.4   5%
 Depreciation
  and
  amortization    26.2         27.2    (4%)   78.1         79.3  (2%)
 Restructuring
  charges         (0.3)         3.0  (110%)    2.1          3.0 (30%)
                ------- -----------         ------ ------------

 Total operating
  costs and
  expenses       129.0        133.8    (4%)  392.7        385.6   2%
                ------- -----------         ------ ------------

Operating income $73.0        $68.7     6%  $217.1       $222.3  (2%)
                ======= ===========         ====== ============

Wireless
Revenue
 Service         $68.2        $59.3    15%  $197.9       $174.5  13%
 Equipment         6.9          5.7    21%    19.2         18.7   3%
                ------- -----------         ------ ------------

 Total revenue    75.1         65.0    16%   217.1        193.2  12%

Operating costs
 and expenses
 Cost of
  services and
  products        39.9         35.4    13%   112.0        109.9   2%
 Selling,
  general and
  administrative  16.6         15.8     5%    50.2         45.2  11%
 Depreciation
  and
  amortization     9.6          7.5    28%    28.1         23.6  19%
                ------- -----------         ------ ------------

 Total operating
  costs and
  expenses        66.1         58.7    13%   190.3        178.7   6%
                ------- -----------         ------ ------------

Operating income  $9.0         $6.3    43%   $26.8        $14.5  85%
                ======= ===========         ====== ============

Technology
 Solutions
Revenue
 Telecom and IT
  equipment
  distribution   $52.9        $42.6    24%  $125.0       $114.4   9%
 Data center and
  managed
  services        18.4         12.8    44%    48.2         34.7  39%
 Professional
  services         2.8          1.9    47%     6.9          5.2  33%
                ------- -----------         ------ ------------

 Total revenue    74.1         57.3    29%   180.1        154.3  17%

Operating costs
 and expenses
 Cost of
  services and
  products        59.5         45.8    30%   143.2        124.2  15%
 Selling,
  general and
  administrative   7.0          5.4    30%    20.1         16.0  26%
 Depreciation
  and
  amortization     1.9          0.9   111%     4.6          2.7  70%
                ------- -----------         ------ ------------

 Total operating
  costs and
  expenses        68.4         52.1    31%   167.9        142.9  17%
                ------- -----------         ------ ------------

Operating income  $5.7         $5.2    10%   $12.2        $11.4   7%
                ======= ===========         ====== ============

Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)


                    Three Months                Nine Months
                 Ended September 30,   %    Ended September 30,   %
                   2007      2006    Change   2007      2006    Change
                 --------- --------- ------ --------- --------- ------
Revenue
  Wireline       $202.0      $202.5     0%  $609.8      $607.9     0%
  Wireless         75.1        65.0    16%   217.1       193.2    12%
  Technology
   Solutions       74.1        57.3    29%   180.1       154.3    17%
  Eliminations     (6.9)       (4.7)   47%   (18.4)      (13.7)   34%
                 --------- ---------        --------- ---------

  Total revenue  $344.3      $320.1     8%  $988.6      $941.7     5%
                 ========= =========        ========= =========

Cost of Services
 and Products
  Wireline        $66.0       $65.9     0%  $199.0      $194.9     2%
  Wireless         39.9        35.4    13%   112.0       109.9     2%
  Technology
   Solutions       59.5        45.8    30%   143.2       124.2    15%
  Eliminations     (6.4)       (4.2)   52%   (16.7)      (12.5)   34%
                 --------- ---------        --------- ---------

  Total cost of
   services and
   products      $159.0      $142.9    11%  $437.5      $416.5     5%
                 ========= =========        ========= =========

Selling, General
 & Administrative
  Wireline        $37.1       $37.7    (2%) $113.5      $108.4     5%
  Wireless         16.6        15.8     5%    50.2        45.2    11%
  Technology
   Solutions        7.0         5.4    30%    20.1        16.0    26%
  Corporate and
   eliminations     4.6         0.6   n/m     12.8        10.0    28%
                 --------- ---------        --------- ---------

  Total selling,
   general &
   administrative $65.3       $59.5    10%  $196.6      $179.6     9%
                 ========= =========        ========= =========

Depreciation and
 Amortization
  Wireline        $26.2       $27.2    (4%)  $78.1       $79.3    (2%)
  Wireless          9.6         7.5    28%    28.1        23.6    19%
  Technology
   Solutions        1.9         0.9   111%     4.6         2.7    70%
  Corporate           -           -   n/m        -           -   n/m
                 --------- ---------        --------- ---------

  Total
   depreciation
   and
   amortization   $37.7       $35.6     6%  $110.8      $105.6     5%
                 ========= =========        ========= =========

Restructuring
 Charges,
 Shareholder
 Claim
 Settlement, and
 Gain on Sale of
 Broadband Assets
  Wireline        $(0.3)       $3.0  (110%)   $2.1        $3.0   (30%)
  Wireless            -           -   n/m        -           -   n/m
  Technology
   Solutions          -           -   n/m        -           -   n/m
  Corporate           -        (4.4) (100%)    0.2        (0.8) (125%)
                 --------- ---------        --------- ---------

  Total
   restructuring
   charges,
   shareholder
   claim
   settlement,
   and gain on
   sale of
   broadband
   assets         $(0.3)      $(1.4)  (79%)   $2.3        $2.2     5%

Operating Income
  Wireline        $73.0       $68.7     6%  $217.1      $222.3    (2%)
  Wireless          9.0         6.3    43%    26.8        14.5    85%
  Technology
   Solutions        5.7         5.2    10%    12.2        11.4     7%
  Corporate and
   eliminations    (5.1)        3.3   n/m    (14.7)      (10.4)   41%
                 --------- ---------        --------- ---------

  Total operating
   income         $82.6       $83.5    (1%) $241.4      $237.8     2%
                 ========= =========        ========= =========


Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)


                                            September 30, December 31,
                                                2007          2006
                                            ------------- ------------
 (in thousands)

 Local access lines                                 848.7        887.1
 DSL subscribers                                    217.6        198.3
 Custom Connections (Super Bundle)
  subscribers                                       185.4        173.2


 Postpaid wireless subscribers                      391.0        365.8
 Prepaid wireless subscribers                       166.4        162.3
                                            ------------- ------------

 Total wireless subscribers                         557.4        528.1
                                            ============= ============


 Consumer long distance lines                       381.1        394.8
 Business long distance lines                       166.6        157.5
                                            ------------- ------------

 Total long distance lines                          547.7        552.3
                                            ============= ============


 Data Center and Managed Services
   Raised Floor (in square feet)                  135,000       91,000
   Utilization rate                                   84%          91%


Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)
(In thousands)



                       ----------------------- -----------------------
                                2005                    2006
                       ----------------------- -----------------------
                        1Q    2Q    3Q    4Q    1Q    2Q    3Q    4Q
                       ----- ----- ----- ----- ----- ----- ----- -----
Local Access Lines
----------------------

In-Territory:
   Primary Residential 584.2 573.0 563.9 555.7 547.4 536.7 522.5 510.5
   Secondary
    Residential         48.9  47.1  45.4  43.9  42.4  40.9  39.2  37.6
   Business/Other      296.1 294.3 292.9 293.3 290.9 291.3 291.4 288.6
                       ----- ----- ----- ----- ----- ----- ----- -----
Total In-Territory     929.2 914.4 902.2 892.9 880.7 868.9 853.1 836.7

Out-of-Territory:
   Primary Residential  17.7  18.4  20.5  21.5  22.8  24.8  26.8  28.1
   Secondary
    Residential          0.8   0.9   1.0   1.0   1.1   1.1   1.2   1.2
   Business/Other       12.2  12.8  13.9  15.2  16.3  17.7  19.4  21.0
                       ----- ----- ----- ----- ----- ----- ----- -----
Total Out-of-Territory  30.7  32.1  35.4  37.7  40.2  43.6  47.4  50.3

                       ----- ----- ----- ----- ----- ----- ----- -----
Total Access Lines     959.9 946.5 937.6 930.6 920.9 912.5 900.5 887.0
                       ===== ===== ===== ===== ===== ===== ===== =====



                                                     -----------------
                                                           2007
                                                     -----------------
                                                      1Q    2Q    3Q
                                                     ----- ----- -----
Local Access Lines
----------------------------------------------------

In-Territory:
   Primary Residential                               499.1 484.8 468.4
   Secondary Residential                              36.2  34.9  33.4
   Business/Other                                    287.6 287.7 286.9
                                                     ----- ----- -----
Total In-Territory                                   822.9 807.4 788.7

Out-of-Territory:
   Primary Residential                                29.4  30.7  32.0
   Secondary Residential                               1.2   1.3   1.3
   Business/Other                                     22.4  24.2  26.7
                                                     ----- ----- -----
Total Out-of-Territory                                53.0  56.2  60.0

                                                     ----- ----- -----
Total Access Lines                                   875.9 863.6 848.7
                                                     ===== ===== =====


Cincinnati Bell Inc.
Net Debt Calculation
(Unaudited)
(Dollars in millions)


                              September 30, December 31,    Change
                                                         -------------
                                  2007          2006        $      %
                              ------------- ------------ -------------

Credit facility, revolver            $40.0           $-   $40.0  n/m
Credit facility, tranche B
 term loan                           212.0        395.0  (183.0) (46%)
7 1/4% Senior Notes due 2013         470.5        496.9   (26.4)  (5%)
8 3/8% Senior Subordinated
 Notes due 2014                      634.2        631.5     2.7    0%
7% Senior Notes due 2015             246.0        245.0     1.0    0%
7 1/4% Senior Notes due 2023          50.0         50.0       -    0%
Accounts receivable
 securitization facility              75.0            -    75.0  n/m
Various Cincinnati Bell
 Telephone notes                     230.0        230.0       -    0%
Capital leases and other debt         30.6         24.0     6.6   28%
Net unamortized premium                0.7          0.8    (0.1) (13%)
                              ------------- ------------ ------- -----

 Total debt                        1,989.0      2,073.2   (84.2)  (4%)

Add: Interest rate swap
 liability                             9.8         13.5    (3.7) (27%)
Less: Cash and cash
 equivalents                         (27.3)       (79.4)   52.1  (66%)
                              ------------- ------------ ------- -----

 Net debt (as defined by the
  company)                        $1,971.5     $2,007.3  $(35.8)  (2%)
                              ============= ============ ======= =====

Credit facility availability        $205.9       $245.2  $(39.3) (16%)
                              ============= ============ ======= =====


Cincinnati Bell Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)


                                  Three Months         Nine Months
                               Ended September 30, Ended September 30,
                                  2007      2006     2007      2006
                               ---------- -------- --------- ---------

Cash provided by operating
 activities                        $54.2    $52.6    $209.3    $210.2
                               ---------- -------- --------- ---------

 Capital expenditures              (62.1)   (35.2)   (152.4)   (109.8)
 Acquisition of businesses and
  remaining minority interest
  in CBW                               -        -      (4.6)    (86.7)
 Deposit for wireless licenses
  purchase                             -     (7.0)        -      (7.0)
 Proceeds from sale of
  broadband assets                     -      4.7         -       4.7
 Other, net                         (0.8)     0.2      (0.7)      2.2
                               ---------- -------- --------- ---------

Cash used in investing
 activities                        (62.9)   (37.3)   (157.7)   (196.6)
                               ---------- -------- --------- ---------

 Issuance of long-term debt            -        -      75.0         -
 Increase (decrease) in
  corporate credit facility,
  net                               40.0     (8.0)     40.0       4.0
 Repayment of debt                 (28.0)    (5.7)   (211.2)    (11.4)
 Issuance of common shares -
  exercise of stock options            -      1.0       2.3       1.7
 Debt issuance costs                   -        -      (1.3)        -
 Preferred stock dividends          (2.6)    (2.6)     (7.8)     (7.8)
 Other, net                         (0.1)     0.9      (0.7)      1.7
                               ---------- -------- --------- ---------

Cash provided by (used in)
 financing activities                9.3    (14.4)   (103.7)    (11.8)
                               ---------- -------- --------- ---------

Net increase (decrease) in cash
 and cash equivalents                0.6      0.9     (52.1)      1.8
Cash and cash equivalents at
 beginning of period                26.7     26.6      79.4      25.7
                               ---------- -------- --------- ---------

Cash and cash equivalents at
 end of period                     $27.3    $27.5     $27.3     $27.5
                               ========== ======== ========= =========


Reconciliation of GAAP Cash
 Flow to Free Cash Flow (as
 defined by the company)
Net increase (decrease) in cash
 and cash equivalents               $0.6     $0.9    $(52.1)     $1.8
Less adjustments:
 Issuance of long-term debt and
  net change in corporate
  credit facility                  (40.0)     8.0    (115.0)     (4.0)
 Repayment of debt                  28.0      5.7     211.2      11.4
 Acquisition of businesses and
  remaining minority interest
  in CBW                               -        -       4.6      86.7
                               ---------- -------- --------- ---------

    Free cash flow (as defined
     by the company)              $(11.4)   $14.6     $48.7     $95.9
                               ========== ======== ========= =========


Income tax payments                $ 1.8     $1.4      $5.6      $5.2


Cincinnati Bell Inc.
Reconciliation of Adjusted EBITDA (Non-GAAP) to Operating Income
 (GAAP)
(Unaudited)
(Dollars in millions)


                       -----------------------------------------------
                            Three Months Ended September 30, 2007
                       -----------------------------------------------
                                         Technology            Total
                       Wireline Wireless Solutions  Corporate  Company
                       -----------------------------------------------

 Operating Income
  (GAAP)                 $73.0      $9.0       $5.7    $(5.1)   $82.6

 Add:
  Depreciation and
   amortization           26.2       9.6        1.9        -     37.7
  Restructuring charges   (0.3)        -          -        -     (0.3)
                       -----------------------------------------------

 EBITDA (Non-GAAP)       $98.9     $18.6       $7.6    $(5.1)  $120.0
                       ===============================================



                       -----------------------------------------------
                            Three Months Ended September 30, 2006
                       -----------------------------------------------
                                         Technology            Total
                       Wireline Wireless Solutions  Corporate  Company
                       -----------------------------------------------

 Operating Income
  (GAAP)                 $68.7      $6.3       $5.2     $3.3    $83.5

 Add:
  Depreciation and
   amortization           27.2       7.5        0.9        -     35.6
  Restructuring and
   gain on sale of
   broadband assets        3.0         -          -     (4.4)    (1.4)
                       -----------------------------------------------

 EBITDA (Non-GAAP)       $98.9     $13.8       $6.1    $(1.1)  $117.7
                       ===============================================



                       -----------------------------------------------
                            Nine Months Ended September 30, 2007
                       -----------------------------------------------
                                         Technology            Total
                       Wireline Wireless Solutions  Corporate  Company
                       -----------------------------------------------

 Operating Income
  (GAAP)                $217.1     $26.8      $12.2   $(14.7)  $241.4

 Add:
  Depreciation and
   amortization           78.1      28.1        4.6        -    110.8
  Restructuring charges    2.1         -          -      0.2      2.3
                       -----------------------------------------------

 EBITDA (Non-GAAP)      $297.3     $54.9      $16.8   $(14.5)  $354.5
                       ===============================================



                       -----------------------------------------------
                            Nine Months Ended September 30, 2006
                       -----------------------------------------------
                                         Technology            Total
                       Wireline Wireless Solutions  Corporate  Company
                       -----------------------------------------------

 Operating Income
  (GAAP)                $222.3     $14.5      $11.4   $(10.4)  $237.8

 Add:
  Depreciation and
   amortization           79.3      23.6        2.7        -    105.6
  Restructuring,
   shareholder claim
   settlement and gain
   on sale of broadband
   assets                  3.0         -          -     (0.8)     2.2
                       -----------------------------------------------

 EBITDA (Non-GAAP)      $304.6     $38.1      $14.1   $(11.2)  $345.6
                       ===============================================

Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                                           Three
                                                        Months Ended
                                                       September 30,
                           Three                            2007
                        Months Ended                  Before Special
                       September 30,                        Items
                        2007 (GAAP)    Special Items     (Non-GAAP)
                                             A
  Revenue                     $344.3           $   -            $344.3

  Costs and expenses
   Cost of services and
    products                   159.0               -             159.0
   Selling, general and
    administrative              65.3               -              65.3
   Depreciation and
    amortization                37.7               -              37.7
   Restructuring
    charges (gains)             (0.3)            0.3                 -
                       -------------- --------------- ----------------
     Operating income           82.6            (0.3)             82.3

  Interest expense              38.0               -              38.0
  Other expense, net             0.2               -               0.2
                       -------------- --------------- ----------------

  Income before income
   taxes                        44.4            (0.3)             44.1
  Income tax expense            18.7            (0.1)             18.6
                       -------------- --------------- ----------------

  Net income                    25.7            (0.2)             25.5

  Preferred stock
   dividends                     2.6               -               2.6
                       -------------- --------------- ----------------

  Net income applicable
   to common
   shareowners                 $23.1           $(0.2)            $22.9
                       ============== =============== ================


  Weighted average
   diluted common
   shares                      257.2           257.2             257.2
                       ============== =============== ================

  Diluted earnings per
   common share                $0.09           $   -             $0.09
                       ============== =============== ================


  Normalized results have been adjusted for the following (pretax
   adjustments are tax effected at 40%):

A Adjustment to the company's restructuring reserve.


Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)
                                        Special Items
                                 ---------------------------
                                                               Nine
                                                              Months
                                                               Ended
                                                             September
                         Nine                                 30, 2007
                        Months                                Before
                         Ended                                Special
                      September                  Dividend      Items
                          30,     Restructuring     From       (Non-
                      2007 (GAAP)    Charge      Investment    GAAP)
                                        A            B
 Revenue                  $988.6            $-           $-    $988.6

 Costs and expenses
   Cost of services
    and products           437.5             -            -     437.5
   Selling, general
    and administrative     196.6             -            -     196.6
   Depreciation and
    amortization           110.8             -            -     110.8
   Restructuring
    charges                  2.3          (2.3)           -         -
                      ----------- ------------- ------------ ---------
      Operating income     241.4           2.3            -     243.7

 Interest expense          117.1             -            -     117.1
 Other income, net          (2.1)            -          1.9      (0.2)
                      ----------- ------------- ------------ ---------

 Income before income
  taxes                    126.4           2.3         (1.9)    126.8
 Income tax expense         54.0           1.0         (0.8)     54.2
                      ----------- ------------- ------------ ---------

 Net income                 72.4           1.3         (1.1)     72.6

 Preferred stock
  dividends                  7.8             -            -       7.8
                      ----------- ------------- ------------ ---------

 Net income applicable
  to common
  shareowners              $64.6          $1.3        $(1.1)    $64.8
                      =========== ============= ============ =========


 Weighted average
  diluted common
  shares                   256.6         256.6        256.6     256.6
                      =========== ============= ============ =========

 Diluted earnings per
  common share             $0.25         $0.01       $(0.01)    $0.25
                      =========== ============= ============ =========


 Normalized results have been adjusted for the following
  (pretax adjustments are tax effected at 40%):

A  The company incurred employee separation expense primarily related
    to the outsourcing of certain accounting functions and the
    reduction in workforce of various other administrative functions.

B  One-time dividend received from cost investment.


Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                       Special Items
                                  ------------------------
                                                              Three
                                                             Months
                                                              Ended
                                                           September
                                                             30, 2006
                       Three       Gain on                   Before
                    Months Ended   Sale of                   Special
                   September 30,  Broadband  Restructuring    Items
                    2006 (GAAP)     Assets      Charge     (Non-GAAP)
                                      A            B
 Revenue                  $320.1         $-            $-      $320.1

 Costs and expenses
    Cost of
     services and
     products              142.9          -             -       142.9
    Selling,
     general and
     administrative         59.5          -             -        59.5
    Depreciation
     and
     amortization           35.6          -             -        35.6
    Gain on sale of
     broadband
     assets                 (4.7)       4.7             -           -
    Restructuring
     charges                 3.3          -          (3.3)          -
                   -------------- ---------- ------------- -----------
       Operating
        income              83.5       (4.7)          3.3        82.1

 Minority interest
  Income                    (0.2)         -             -        (0.2)
 Interest expense           41.4          -             -        41.4
 Other income, net          (0.1)         -             -        (0.1)
                   -------------- ---------- ------------- -----------

 Income before
  income taxes              42.4       (4.7)          3.3        41.0
 Income tax expense         17.3       (1.9)          1.3        16.7
                   -------------- ---------- ------------- -----------

 Net income                 25.1       (2.8)          2.0        24.3

 Preferred stock
  dividends                  2.6          -             -         2.6
                   -------------- ---------- ------------- -----------

 Net income
  applicable to
  common
  shareowners              $22.5      $(2.8)         $2.0       $21.7
                   ============== ========== ============= ===========


 Weighted average
  diluted common
  shares                   254.4      254.4         254.4       254.4
                   ============== ========== ============= ===========

 Diluted earnings
  per common share         $0.09     $(0.01)        $0.01       $0.09
                   ============== ========== ============= ===========


 Normalized results have been adjusted for the following
  (pretax adjustments are tax effected at 40%):

A   The company sold certain broadband fiber assets for a gain of $4.7
     million.

B   In September 2006, the company incurred employee separation
     expense related to the outsourcing of certain supply chain
     functions.


Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) -
 Reconciliation to Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                 Special Items
                      ---------------------------------------
                                                               Nine
                                                              Months
                                                               Ended
               Nine                                          September
              Months     Gain                                 30, 2006
               Ended       on                                 Before
             September   Sale                                 Special
                30,        of    Shareholder Income  Restruc   Items
               2006    Broadband    Claim      Tax   -turing   (Non-
               (GAAP)   Assets   Settlement  Expense  Charge   GAAP)
                           A          B         C       D
 Revenue     $941.7        $-       $-          $-      $-   $941.7

 Costs and
  expenses
  Cost of
   services
   and
   products   416.5         -        -           -       -    416.5
  Selling,
   general
   and
   admini-
   strative   179.6         -        -           -       -    179.6
  Depre-
   ciation
    and
    amorti-
    zation    105.6         -        -           -       -    105.6
  Shareholder
   claim
   settlement   6.3         -     (6.3)          -       -        -
  Gain on
   sale of
   broadband
   assets      (7.6)      7.6        -           -       -        -
  Restruc-
   turing
    charges     3.5         -        -           -    (3.5)       -
             --------- --------- ----------- ------- ------- ---------
   Operating
    income    237.8      (7.6)     6.3           -     3.5    240.0

 Minority
  interest
  expense       0.1         -        -           -       -      0.1
 Interest
  expense     121.3         -        -           -       -    121.3
 Other
  income, net  (0.4)        -        -           -       -     (0.4)
             --------- --------- ----------- ------- ------- ---------

 Income
  before
  income
  taxes       116.8      (7.6)     6.3           -     3.5    119.0
 Income tax
  expense      53.2      (3.0)     2.5        (3.6)    1.4     50.5
             --------- --------- ----------- ------- ------- ---------

 Net income    63.6      (4.6)     3.8         3.6     2.1     68.5

 Preferred
  stock
  dividends     7.8         -        -           -       -      7.8
             --------- --------- ----------- ------- ------- ---------

 Net income
  applicable
  to common
  shareowners $55.8     $(4.6)    $3.8        $3.6    $2.1    $60.7
             ========= ========= =========== ======= ======= =========


 Weighted
  average
  diluted
  common
  shares      252.7     252.7    252.7       252.7   252.7    252.7
             ========= ========= =========== ======= ======= =========

 Diluted
  earnings
  per common
  share       $0.22    $(0.02)   $0.02       $0.01   $0.01   $ 0.24
             ========= ========= =========== ======= ======= =========


 Normalized results have been adjusted for the following (pretax
  adjustments are tax effected at 40%):

A  Gain on sale of broadband assets due to expiration of certain
    indemnifications that were previously reserved.

B  Reserve of $6.3 million recorded for settlement of a shareholder
    claim.

C  Kentucky net operating loss carry-forward write-off due to
    regulations issued in the first quarter of 2006.

D  In September 2006, the company incurred employee separation expense
    related to the outsourcing of certain supply chain functions.


Cincinnati Bell Inc.
Reconciliation of Adjusted EBITDA (Non-GAAP) Guidance to Operating
 Income (GAAP) Guidance
(Unaudited)
(Dollars in millions)


                                                                  2007
                                                                  ----
 Consolidated 2007 Operating Income (GAAP) Guidance               $318

 Add:
          Depreciation and amortization                            150
          Restructuring charges                                      2
                                                                  ----

 Consolidated 2007 Adjusted EBITDA Guidance                       $470
                                                                  ====

SOURCE: Cincinnati Bell Inc.

Cincinnati Bell Inc.
Investor / Media contact:
Traci Bolte, 513-397-1195
traci.bolte@cinbell.com