Investor Relations

News Releases

Print Page << Back

Cincinnati Bell Inc. Reports Second Quarter 2008 Double-Digit Earnings per Share Growth

07/31/08

Wireless and Technology Solutions Drive Year-Over-Year Revenue Growth for 11th Straight Quarter

CINCINNATI--(BUSINESS WIRE)--July 31, 2008--Cincinnati Bell Inc. (NYSE:CBB) today announced financial results for the second quarter of 2008, which included year-over-year revenue and earnings growth. Revenue totaled $351 million, an increase of 7 percent year-over-year, with operating income of $80 million. Net income for the quarter was $26 million, up 6 percent from last year. Earnings per share on a diluted basis were 9 cents, which is a 10 percent increase over the second quarter of 2007. Adjusted earnings before interest, taxes, depreciation and amortization(1) (Adjusted EBITDA) equaled $119 million, up $1 million, or 1 percent from a year ago.

"By focusing on the quality, convenience and value that consumers and businesses demand in today's market, we continue to deliver outstanding value to our customers," said Jack Cassidy, president and chief executive officer of Cincinnati Bell. "As a result, we were able to achieve another quarter of year-over-year growth in revenue and Adjusted EBITDA."

    Quarterly Highlights

    --  Quarterly revenue increased $22 million to $351 million with
        both service and equipment revenue driving the growth equally.

    --  The Technology Solutions segment produced quarterly revenue of
        $79 million, up 37 percent from a year ago resulting in
        operating income growth of 8 percent and Adjusted EBITDA
        growth of 51 percent. The segment began billing an additional
        21,000 square feet of new data center space in the quarter,
        which reflects a 14 percent increase over the first quarter of
        2008.

    --  Wireless service revenue in the second quarter was $72
        million, up 7 percent from a year ago, which contributed to
        operating income growth of 19 percent and Adjusted EBITDA
        growth of 7 percent. The Adjusted EBITDA margin(1) was 27
        percent.

    --  Year-over-year DSL subscriber growth equaled 8 percent and
        churn remained below 2 percent. At the end of the quarter,
        Cincinnati Bell had a total of 229,000 DSL subscribers.

    --  Quarterly free cash flow(2) was $54 million. Capital
        expenditures in the second quarter equaled $43 million, down
        $6 million from a year ago. The company used part of its free
        cash flow to reduce net debt(3) to $1.97 billion, a decline of
        $18 million from the end of the first quarter 2008.

    --  Cincinnati Bell also purchased an additional 7 million shares
        of common stock for a total of $30 million in the second
        quarter. The company has now purchased 11 million shares under
        its current common stock repurchase program. This leaves $103
        million remaining in its purchase authorization. Cincinnati
        Bell expects to continue repurchases and the timing and nature
        are subject to market conditions and applicable securities
        laws.

    --  On July 10, Cincinnati Bell announced the promotion of Brian
        Ross to the position of chief operating officer and named Gary
        Wojtaszek as its new chief financial officer.

"Our second quarter results reflect the many steps Cincinnati Bell has taken over the past few years to balance wireless and technology solutions growth while still generating strong and stable free cash flow," said Brian Ross, chief operating officer. "We are pleased with these results which continue to fund our share repurchase program and net debt reduction."

Wireline Segment

Quarterly Wireline revenue equaled $203 million, down $2 million or 1 percent from the second quarter of 2007. Increased revenue from data services, long distance, expansion markets and the acquisition of eGix, partially offset lower voice revenue in Cincinnati Bell's traditional service area. Operating income totaled $70 million compared with $72 million in the second quarter of 2007 with Adjusted EBITDA of $97 million, down $2 million from a year ago. Year-over-year total access line loss in the second quarter was 6.7 percent reflecting a decline in the company's in-territory consumer access lines. Business lines increased 1.3 percent while expansion market access lines increased 16 percent from a year ago.

Wireless Segment

Quarterly revenue from the Wireless segment increased 7 percent to $78 million and operating income equaled $12 million, up $2 million from a year ago, primarily due to a $5 million, or 7 percent, increase in service revenue. Adjusted EBITDA was $21 million, up $1 million compared with the second quarter of 2007.

Cincinnati Bell had 575,000 wireless customers at the end of the quarter, which reflected year-over-year growth of 7 percent in its postpaid wireless customer base. Postpaid quarterly average revenue per user (ARPU) was $47.36, down slightly from the second quarter of 2007. Prepaid ARPU was $25.75, up 15 percent year-over-year, while prepaid subscribers declined 4 percent.

Technology Solutions

Technology Solutions revenue was $79 million, up $21 million or 37 percent from a year ago. Telecommunications and IT Equipment revenue increased $10 million or 26 percent from the prior year while Data Center and Managed Services revenue grew $10 million, a 62 percent increase compared to the second quarter of 2007. Operating income totaled $4 million. Adjusted EBITDA was $8 million, up 51 percent from the second quarter of 2007.

Capital expenditures of $10 million in the quarter were used primarily for construction of future data center space. Billable data center capacity during the second quarter increased by 21,000 square feet to 202,000 square feet. A total of 21,000 square feet also began billing in the quarter, which resulted in an 87 percent utilization rate compared to 85 percent in the first quarter of 2008.

2008 Guidance

Cincinnati Bell confirms its financial guidance for 2008:

         Category                         2008 Guidance
----------------------------------------------------------------------
Revenue                               Approx. $1.4 billion
----------------------------------------------------------------------
Adjusted EBITDA                       Approx. $485 million
----------------------------------------------------------------------
Capital Expenditures                 Approx. 16% of revenue
----------------------------------------------------------------------
Free Cash Flow                        Approx. $150 million
----------------------------------------------------------------------

Conference Call/Webcast

Cincinnati Bell will host a conference call today at 10:00 a.m. (ET) to discuss its results for the second quarter of 2008. 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 888.713.3588. Callers located outside of the U.S. and Canada may dial 913.312.0642. A taped replay of the conference call will be available one hour after the conclusion of the call until 5:00 p.m. on Thursday, August 14, 2008. 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 4670113. 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 July 31, 2008. 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)Adjusted EBITDA and Adjusted EBITDA margin provide useful measures of operational performance. The company defines Adjusted EBITDA as GAAP Operating Income plus depreciation, amortization, restructuring charges, asset impairments and other special items. The company defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenues. Adjusted EBITDA and Adjusted EBITDA margin should not be considered as alternatives to comparable GAAP measures of profitability and may not be comparable with these measures as defined by other companies.

(2)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, the repurchase of common stock, and 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.

(3)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.

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.

About Cincinnati Bell Inc.

With headquarters in Cincinnati, Ohio, Cincinnati Bell (NYSE: CBB) provides integrated communications solutions--including local, long distance, data, Internet, and wireless services--that help keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world.

In addition, businesses ranging in size from start-up companies to large enterprises turn to Cincinnati Bell for efficient, scalable office communications systems as well as complex information technology solutions including data center and managed services.

Cincinnati Bell conducts its operations through three business segments: Wireline, Wireless, and Technology Solutions. For more information, visit www.cincinnatibell.com.

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



                                           Three Months
                                          Ended June 30,     Change
                                           2008    2007     $      %
                                          ------- ------- ------ -----

 Revenue                                  $351.2  $329.1  $22.1    7%

 Costs and expenses
  Cost of services and products            160.0   145.3   14.7   10%
  Selling, general and administrative       72.2    65.8    6.4   10%
  Depreciation and amortization             37.7    36.8    0.9    2%
  Restructuring charges                      1.4     0.1    1.3   n/m
  Asset impairment                             -       -      -   n/m
                                          ------- ------- ------ -----

       Operating income                     79.9    81.1   (1.2)  (1%)

 Interest expense                           34.8    39.0   (4.2) (11%)
 Other income, net                          (0.2)   (0.2)     -    0%
                                          ------- ------- ------ -----

 Income before income taxes                 45.3    42.3    3.0    7%
 Income tax expense                         19.7    18.1    1.6    9%
                                          ------- ------- ------ -----

 Net income                                 25.6    24.2    1.4    6%

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

 Net income applicable to common
  shareowners                              $23.0   $21.6   $1.4    6%
                                          ======= ======= ====== =====


 Basic earnings per common share           $0.10   $0.09
                                          ======= =======
 Diluted earnings per common share         $0.09   $0.08
                                          ======= =======

 Weighted average common shares
  outstanding
  (in millions)
  ----------------------------------------
  - Basic                                  240.9   247.3
  - Diluted                                248.4   257.6



                                            Six Months
                                          Ended June 30,     Change
                                           2008    2007     $      %
                                          ------- ------- ------ -----

 Revenue                                  $699.7  $644.4  $55.3    9%

 Costs and expenses
  Cost of services and products            318.8   278.4   40.4   15%
  Selling, general and administrative      142.3   131.3   11.0    8%
  Depreciation and amortization             75.0    73.2    1.8    2%
  Restructuring charges                     25.4     2.6   22.8   n/m
  Asset impairment                           1.2       -    1.2   n/m
                                          ------- ------- ------ -----

      Operating income                     137.0   158.9  (21.9) (14%)

 Interest expense                           71.1    79.1   (8.0) (10%)
 Other income, net                          (1.4)   (2.2)   0.8  (36%)
                                          ------- ------- ------ -----

 Income before income taxes                 67.3    82.0  (14.7) (18%)
 Income tax expense                         28.8    35.3   (6.5) (18%)
                                          ------- ------- ------ -----

 Net income                                 38.5    46.7   (8.2) (18%)

 Preferred stock dividends                   5.2     5.2      -    0%
                                          ------- ------- ------ -----

 Net income applicable to common
  shareowners                              $33.3   $41.5  $(8.2) (20%)
                                          ======= ======= ====== =====


 Basic earnings per common share           $0.14   $0.17
                                          ======= =======
 Diluted earnings per common share         $0.13   $0.16
                                          ======= =======

 Weighted average common shares
  outstanding
  (in millions)
  ---------------------------------------
  - Basic                                  244.0   247.2
  - Diluted                                250.8   256.4
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)



                                           Three Months
                                          Ended June 30,    Change
                                           2008    2007     $      %
                                          ------- ------ ------- -----
 Wireline
 Revenue
  Voice - local service                     $98.9 $110.3 $(11.4) (10%)
  Data                                       67.9   63.5    4.4    7%
  Long distance and VoIP                     24.6   19.8    4.8   24%
  Other                                      11.1   10.5    0.6    6%
                                          ------- ------ ------- -----

  Total revenue                             202.5  204.1   (1.6)  (1%)

 Operating costs and expenses
  Cost of services and products              66.4   67.7   (1.3)  (2%)
  Selling, general and administrative        39.6   38.4    1.2    3%
  Depreciation and amortization              25.1   26.0   (0.9)  (3%)
  Restructuring charges                       1.2      -    1.2   n/m
  Asset impairment                              -      -      -   n/m
                                          ------- ------ ------- -----

  Total operating costs and expenses        132.3  132.1    0.2    0%
                                          ------- ------ ------- -----

 Operating income                           $70.2  $72.0  $(1.8)  (3%)
                                          ======= ====== ======= =====

 Wireless
 Revenue
  Service                                   $72.3  $67.4   $4.9    7%
  Equipment                                   6.0    6.1   (0.1)  (2%)
                                          ------- ------ ------- -----

  Total revenue                              78.3   73.5    4.8    7%

 Operating costs and expenses
  Cost of services and products              40.6   37.4    3.2    9%
  Selling, general and administrative        16.8   16.5    0.3    2%
  Depreciation and amortization               8.6    9.3   (0.7)  (8%)
  Restructuring charges                         -      -      -   n/m
                                          ------- ------ ------- -----

  Total operating costs and expenses         66.0   63.2    2.8    4%
                                          ------- ------ ------- -----

 Operating income                           $12.3  $10.3   $2.0   19%
                                          ======= ====== ======= =====

 Technology Solutions
 Revenue
  Telecom and IT equipment distribution     $50.1  $39.7  $10.4   26%
  Data center and managed services           24.9   15.4    9.5   62%
  Professional services                       3.5    2.4    1.1   46%
                                          ------- ------ ------- -----

  Total revenue                              78.5   57.5   21.0   37%

 Operating costs and expenses
  Cost of services and products              60.4   45.7   14.7   32%
  Selling, general and administrative         9.8    6.3    3.5   56%
  Depreciation and amortization               3.9    1.5    2.4   n/m
  Restructuring charges                       0.1      -    0.1   n/m
                                          ------- ------ ------- -----

  Total operating costs and expenses         74.2   53.5   20.7   39%
                                          ------- ------ ------- -----

 Operating income                            $4.3   $4.0   $0.3    8%
                                          ======= ====== ======= =====



                                            Six Months
                                          Ended June 30,    Change
                                           2008    2007     $      %
                                          ------- ------ ------- -----
 Wireline
 Revenue
  Voice - local service                    $199.9 $223.0 $(23.1) (10%)
  Data                                      135.5  126.0    9.5    8%
  Long distance and VoIP                     48.9   38.5   10.4   27%
  Other                                      20.8   20.3    0.5    2%
                                          ------- ------ ------- -----

  Total revenue                             405.1  407.8   (2.7)  (1%)

 Operating costs and expenses
  Cost of services and products             133.9  133.1    0.8    1%
  Selling, general and administrative        78.5   76.3    2.2    3%
  Depreciation and amortization              50.2   52.0   (1.8)  (3%)
  Restructuring charges                      24.4    2.4   22.0   n/m
  Asset impairment                            1.2      -    1.2   n/m
                                          ------- ------ ------- -----

  Total operating costs and expenses        288.2  263.8   24.4    9%
                                          ------- ------ ------- -----

 Operating income                          $116.9 $144.0 $(27.1) (19%)
                                          ======= ====== ======= =====

 Wireless
 Revenue
  Service                                  $144.3 $129.7  $14.6   11%
  Equipment                                  12.5   12.3    0.2    2%
                                          ------- ------ ------- -----

  Total revenue                             156.8  142.0   14.8   10%

 Operating costs and expenses
  Cost of services and products              80.6   72.1    8.5   12%
  Selling, general and administrative        33.6   33.6      -    0%
  Depreciation and amortization              17.6   18.4   (0.8)  (4%)
  Restructuring charges                       0.4      -    0.4   n/m
                                          ------- ------ ------- -----

  Total operating costs and expenses        132.2  124.1    8.1    7%
                                          ------- ------ ------- -----

 Operating income                           $24.6  $17.9   $6.7   37%
                                          ======= ====== ======= =====

 Technology Solutions
 Revenue
  Telecom and IT equipment distribution     $99.8  $72.1  $27.7   38%
  Data center and managed services           46.6   29.8   16.8   56%
  Professional services                       6.8    4.1    2.7   66%
                                          ------- ------ ------- -----

  Total revenue                             153.2  106.0   47.2   45%

 Operating costs and expenses
  Cost of services and products             118.3   83.6   34.7   42%
  Selling, general and administrative        19.9   13.1    6.8   52%
  Depreciation and amortization               7.1    2.8    4.3   n/m
  Restructuring charges                       0.4      -    0.4   n/m
                                          ------- ------ ------- -----

  Total operating costs and expenses        145.7   99.5   46.2   46%
                                          ------- ------ ------- -----

 Operating income                            $7.5   $6.5   $1.0   15%
                                          ======= ====== ======= =====
Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)



                                          Three Months
                                         Ended June 30,      Change
                                          2008     2007     $      %
                                        --------- ------- ------ -----
 Revenue
  Wireline                                $202.5  $204.1  $(1.6)  (1%)
  Wireless                                  78.3    73.5    4.8    7%
  Technology Solutions                      78.5    57.5   21.0   37%
  Eliminations                              (8.1)   (6.0)  (2.1)  35%
                                        --------- ------- ------ -----

  Total revenue                           $351.2  $329.1  $22.1    7%
                                        ========= ======= ====== =====

 Cost of Services and Products
  Wireline                                 $66.4   $67.7  $(1.3)  (2%)
  Wireless                                  40.6    37.4    3.2    9%
  Technology Solutions                      60.4    45.7   14.7   32%
  Eliminations                              (7.4)   (5.5)  (1.9)  35%
                                        --------- ------- ------ -----

  Total cost of services and products     $160.0  $145.3  $14.7   10%
                                        ========= ======= ====== =====

 Selling, General and Administrative
  Wireline                                 $39.6   $38.4   $1.2    3%
  Wireless                                  16.8    16.5    0.3    2%
  Technology Solutions                       9.8     6.3    3.5   56%
  Corporate and eliminations                 6.0     4.6    1.4   30%
                                        --------- ------- ------ -----

  Total selling, general and
   administrative                          $72.2   $65.8   $6.4   10%
                                        ========= ======= ====== =====

 Depreciation and Amortization
  Wireline                                 $25.1   $26.0  $(0.9)  (3%)
  Wireless                                   8.6     9.3   (0.7)  (8%)
  Technology Solutions                       3.9     1.5    2.4   n/m
  Corporate                                  0.1       -    0.1   n/m
                                        --------- ------- ------ -----

  Total depreciation and amortization      $37.7   $36.8   $0.9    2%
                                        ========= ======= ====== =====

 Restructuring and Asset Impairment
  Charges
  Wireline                                  $1.2      $-   $1.2   n/m
  Wireless                                     -       -      -   n/m
  Technology Solutions                       0.1       -    0.1   n/m
  Corporate                                  0.1     0.1      -    0%
                                        --------- ------- ------ -----

  Total restructuring and asset
   impairment charges                       $1.4    $0.1   $1.3   n/m
                                        ========= ======= ====== =====

 Operating Income
  Wireline                                 $70.2   $72.0  $(1.8)  (3%)
  Wireless                                  12.3    10.3    2.0   19%
  Technology Solutions                       4.3     4.0    0.3    8%
  Corporate and eliminations                (6.9)   (5.2)  (1.7)  33%
                                        --------- ------- ------ -----

  Total operating income                   $79.9   $81.1  $(1.2)  (1%)
                                        ========= ======= ====== =====



                                           Six Months
                                         Ended June 30,     Change
                                          2008    2007      $      %
                                         ------- ------- ------- -----
 Revenue
  Wireline                               $405.1  $407.8   $(2.7)  (1%)
  Wireless                                156.8   142.0    14.8   10%
  Technology Solutions                    153.2   106.0    47.2   45%
  Eliminations                            (15.4)  (11.4)   (4.0)  35%
                                         ------- ------- ------- -----

  Total revenue                          $699.7  $644.4   $55.3    9%
                                         ======= ======= ======= =====

 Cost of Services and Products
  Wireline                               $133.9  $133.1    $0.8    1%
  Wireless                                 80.6    72.1     8.5   12%
  Technology Solutions                    118.3    83.6    34.7   42%
  Eliminations                            (14.0)  (10.4)   (3.6)  35%
                                         ------- ------- ------- -----

  Total cost of services and products    $318.8  $278.4   $40.4   15%
                                         ======= ======= ======= =====

 Selling, General and Administrative
  Wireline                                $78.5   $76.3    $2.2    3%
  Wireless                                 33.6    33.6       -    0%
  Technology Solutions                     19.9    13.1     6.8   52%
  Corporate and eliminations               10.3     8.3     2.0   24%
                                         ------- ------- ------- -----

  Total selling, general and
   administrative                        $142.3  $131.3   $11.0    8%
                                         ======= ======= ======= =====

 Depreciation and Amortization
  Wireline                                $50.2   $52.0   $(1.8)  (3%)
  Wireless                                 17.6    18.4    (0.8)  (4%)
  Technology Solutions                      7.1     2.8     4.3   n/m
  Corporate                                 0.1       -     0.1   n/m
                                         ------- ------- ------- -----

  Total depreciation and amortization     $75.0   $73.2    $1.8    2%
                                         ======= ======= ======= =====

 Restructuring and Asset Impairment
  Charges
  Wireline                                $25.6    $2.4   $23.2   n/m
  Wireless                                  0.4       -     0.4   n/m
  Technology Solutions                      0.4       -     0.4   n/m
  Corporate                                 0.2     0.2     0.0    0%
                                         ------- ------- ------- -----

  Total restructuring and asset
   impairment charges                     $26.6    $2.6   $24.0  n/m
                                         ======= ======= ======= =====

 Operating Income
  Wireline                               $116.9  $144.0  $(27.1) (19%)
  Wireless                                 24.6    17.9     6.7   37%
  Technology Solutions                      7.5     6.5     1.0   15%
  Corporate and eliminations              (12.0)   (9.5)   (2.5)  26%
                                         ------- ------- ------- -----

  Total operating income                 $137.0  $158.9  $(21.9) (14%)
                                         ======= ======= ======= =====
Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)


                                              June 30,    December 31,
                                                2008          2007
                                            ------------- ------------
 (in thousands)

 Local access lines                                 805.7        834.3
 DSL subscribers                                    229.2        221.5
 Custom Connections (Super Bundle)
  subscribers                                       188.1        187.2


 Postpaid wireless subscribers                      409.9        400.4
 Prepaid wireless subscribers                       165.1        170.6
                                            ------------- ------------

 Total wireless subscribers                         575.0        571.0
                                            ============= ============


 Consumer long distance lines                       359.1        374.2
 Business long distance lines                       177.2        174.1
                                            ------------- ------------

 Total long distance lines                          536.3        548.3
                                            ============= ============


 Data Center and Managed Services
   Raised Floor (in square feet)                  202,000      144,000
   Utilization rate                                   87%          93%
Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)
(In thousands)



                       ----------------------- -----------------------
                                2006                    2007
                       ----------------------- -----------------------
                        1Q    2Q    3Q    4Q    1Q    2Q    3Q    4Q
                       ----------------------- -----------------------
 Local Access Lines
 ---------------------

 In-Territory:
  Primary Residential  547.4 536.7 522.5 510.5 499.1 484.8 468.4 454.2
  Secondary
   Residential          42.4  40.9  39.2  37.6  36.2  34.9  33.4  32.0
  Business/ Other      290.9 291.3 291.4 288.6 287.6 287.7 286.9 285.8
                       ----------------------- -----------------------
 Total In-Territory    880.7 868.9 853.1 836.7 822.9 807.4 788.7 772.0

 Out-of-Territory:
  Primary Residential   22.8  24.8  26.8  28.1  29.4  30.7  32.0  32.7
  Secondary
   Residential           1.1   1.1   1.2   1.2   1.2   1.3   1.3   1.3
  Business/ Other       16.3  17.7  19.4  21.0  22.4  24.2  26.7  28.3
                       ----------------------- -----------------------
 Total Out-of-
  Territory             40.2  43.6  47.4  50.3  53.0  56.2  60.0  62.3

                       ----------------------- -----------------------
 Total Access Lines    920.9 912.5 900.5 887.0 875.9 863.6 848.7 834.3
                       ======================= =======================



                                                           -----------
                                                              2008
                                                           -----------
                                                            1Q    2Q
                                                           -----------
 Local Access Lines
 ---------------------------------------------------------

 In-Territory:
  Primary Residential                                      441.2 427.6
  Secondary Residential                                     30.7  29.5
  Business/ Other                                          284.3 283.4
                                                           -----------
 Total In-Territory                                        756.2 740.5

 Out-of-Territory:
  Primary Residential                                       32.8  32.7
  Secondary Residential                                      1.4   1.3
  Business/ Other                                           30.2  31.2
                                                           -----------
 Total Out-of-Territory                                     64.4  65.2

                                                           -----------
 Total Access Lines                                        820.6 805.7
                                                           ===========
Cincinnati Bell Inc.
Net Debt Calculation
(Unaudited)
(Dollars in millions)


                                  June 30,  December 31,    Change
                                    2008        2007        $      %
                                  --------- ------------ ------- -----

Credit facility, revolver            $86.0        $55.0   $31.0   56%
Credit facility, tranche B term
 loan                                209.0        211.0    (2.0)  (1%)
7 1/4% Senior Notes due 2013         470.5        470.5       -    0%
8 3/8% Senior Subordinated Notes
 due 2014                            595.3        637.4   (42.1)  (7%)
7% Senior Notes due 2015             250.6        250.6       -    0%
7 1/4% Senior Notes due 2023          50.0         50.0       -    0%
Accounts receivable securitization
 facility                             75.0         75.0       -    0%
Various Cincinnati Bell Telephone
 notes                               230.0        230.0       -    0%
Capital leases and other debt         30.7         29.6     1.1    4%
Net unamortized premium                0.5          0.6    (0.1) (17%)
                                  --------- ------------ ------- -----

 Total debt                        1,997.6      2,009.7   (12.1)  (1%)

Less: Interest rate swap asset        (2.5)        (2.9)    0.4  (14%)
Less: Cash and cash equivalents      (21.4)       (26.1)    4.7  (18%)
                                  --------- ------------ ------- -----

 Net debt (as defined by the
  company)                        $1,973.7     $1,980.7   $(7.0)   0%
                                  ========= ============ ======= =====

Credit facility availability        $136.9       $167.9  $(31.0) (18%)
                                  ========= ============ ======= =====
Cincinnati Bell Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)


                                         Three Months    Six Months
                                        Ended June 30, Ended June 30,
                                         2008   2007    2008    2007
                                        ------ ------- ------- -------

 Cash provided by operating activities  $99.9   $86.8  $187.9  $155.1
                                        ------ ------- ------- -------

  Capital expenditures                  (42.5)  (48.0) (103.2)  (90.3)
  Acquisition of businesses              (2.9)      -   (21.6)   (4.6)
  Other, net                              1.7     0.6     1.0     0.1
                                        ------ ------- ------- -------

 Cash used in investing activities      (43.7)  (47.4) (123.8)  (94.8)
                                        ------ ------- ------- -------

  Issuance of long-term debt                -    75.0       -    75.0
  Change in corporate credit facility,
   net                                  (14.0)      -    31.0       -
  Repayment of debt                      (4.6) (131.9)  (44.6) (183.2)
  Issuance of common shares - exercise
   of stock options                       0.3     2.2     0.3     2.3
  Debt issuance costs                       -    (1.3)      -    (1.3)
  Preferred stock dividends              (5.2)   (2.6)   (7.8)   (5.2)
  Common stock repurchase               (30.3)      -   (47.0)      -
  Other, net                             (0.3)      -    (0.7)   (0.6)
                                        ------ ------- ------- -------

 Cash used in financing activities      (54.1)  (58.6)  (68.8) (113.0)
                                        ------ ------- ------- -------

 Net increase (decrease) in cash and
  cash equivalents                        2.1   (19.2)   (4.7)  (52.7)
 Cash and cash equivalents at beginning
  of period                              19.3    45.9    26.1    79.4
                                        ------ ------- ------- -------

 Cash and cash equivalents at end of
  period                                $21.4   $26.7   $21.4   $26.7
                                        ====== ======= ======= =======


 Reconciliation of GAAP Cash Flow to
  Free Cash Flow (as defined by the
   company)
 Net increase (decrease) in cash and
  cash equivalents                       $2.1  $(19.2)  $(4.7) $(52.7)
 Less adjustments:
  Issuance of long-term debt and change
   in corporate credit facility          14.0   (75.0)  (31.0)  (75.0)
  Repayment of debt                       4.6   131.9    44.6   183.2
  Common stock repurchase                30.3       -    47.0       -
  Acquisition of businesses               2.9       -    21.6     4.6
                                        ------ ------- ------- -------

     Free cash flow (as defined by the
      company)                          $53.9   $37.7   $77.5   $60.1
                                        ====== ======= ======= =======

 Income tax payments                     $1.8    $3.7    $1.9    $3.8
                                        ====== ======= ======= =======
Cincinnati Bell Inc.
Reconciliation of Adjusted EBITDA (Non-GAAP) to Operating Income
 (GAAP)
(Unaudited)
(Dollars in millions)


                        ----------------------------------------------
                               Three Months Ended June 30, 2008
                        ----------------------------------------------
                                          Technology            Total
                        Wireline Wireless Solutions  Corporate Company
                        ----------------------------------------------

 Operating Income
  (GAAP)                 $70.2     $12.3       $4.3     $(6.9)  $79.9
 Add:
  Depreciation and
   amortization           25.1       8.6        3.9       0.1    37.7
  Restructuring charges    1.2         -        0.1       0.1     1.4
                        ----------------------------------------------

 Adjusted EBITDA (Non-
  GAAP)                  $96.5     $20.9       $8.3     $(6.7) $119.0
                        ==============================================



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

 Operating Income
  (GAAP)                 $72.0     $10.3       $4.0     $(5.2)  $81.1
 Add:
  Depreciation and
   amortization           26.0       9.3        1.5         -    36.8
  Restructuring charges      -         -          -       0.1     0.1
                        ----------------------------------------------

 Adjusted EBITDA (Non-
  GAAP)                  $98.0     $19.6       $5.5     $(5.1) $118.0
                        ==============================================

 Year-over-year dollar
  change in Adjusted
  EBITDA                 ($1.5)     $1.3       $2.8     ($1.6)   $1.0

 Year-over-year
  percentage change in
  Adjusted EBITDA           (2%)       7%        51%       31%      1%



                        ----------------------------------------------
                                Six Months Ended June 30, 2008
                        ----------------------------------------------
                                          Technology            Total
                        Wireline Wireless Solutions  Corporate Company
                        ----------------------------------------------

 Operating Income
  (GAAP)                $116.9     $24.6       $7.5    $(12.0) $137.0
 Add:
  Depreciation and
   amortization           50.2      17.6        7.1       0.1    75.0
  Restructuring and
   asset impairment
   charges                25.6       0.4        0.4       0.2    26.6
                        ----------------------------------------------

 Adjusted EBITDA (Non-
  GAAP)                 $192.7     $42.6      $15.0    $(11.7) $238.6
                        ==============================================



                        ----------------------------------------------
                                Six Months Ended June 30, 2007
                        ----------------------------------------------
                                          Technology            Total
                        Wireline Wireless Solutions  Corporate Company
                        ----------------------------------------------

 Operating Income
  (GAAP)                $144.0     $17.9       $6.5     $(9.5) $158.9
 Add:
  Depreciation and
   amortization           52.0      18.4        2.8         -    73.2
  Restructuring charges    2.4         -          -       0.2     2.6
                        ----------------------------------------------

 Adjusted EBITDA (Non-
  GAAP)                 $198.4     $36.3       $9.3     $(9.3) $234.7
                        ==============================================

 Year-over-year dollar
  change in Adjusted
  EBITDA                 ($5.7)     $6.3       $5.7     ($2.4)   $3.9

 Year-over-year
  percentage change in
  Adjusted EBITDA           (3%)      17%        61%       26%      2%
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                    Special Items
                                    -------------
                                                         Three
                          Three                       Months Ended
                      Months Ended                   June 30, 2008
                      June 30, 2008               Before Special Items
                         (GAAP)     Restructuring      (Non-GAAP)
                      ------------------------------------------------
                                          A
 Revenue                    $351.2            $-               $351.2

 Costs and expenses
   Cost of services
    and products             160.0             -                160.0
   Selling, general
    and administrative        72.2             -                 72.2
   Depreciation and
    amortization              37.7             -                 37.7
   Restructuring
    charges                    1.4          (1.4)                   -
                      ------------- ------------- --------------------
      Operating income        79.9           1.4                 81.3

 Interest expense             34.8             -                 34.8
 Other income, net            (0.2)            -                 (0.2)
                      ------------- ------------- --------------------

 Income before income
  taxes                       45.3           1.4                 46.7
 Income tax expense           19.7           0.6                 20.3
                      ------------- ------------- --------------------

 Net income                   25.6           0.8                 26.4

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

 Net income applicable
  to common
  shareowners                $23.0          $0.8                $23.8
                      ============= ============= ====================


 Weighted average
  diluted common
  shares                     248.4         248.4                248.4
                      ============= ============= ====================

 Diluted earnings per
  common share               $0.09         $0.01                $0.10
                      ============= ============= ====================


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

A Charge related to voluntary early retirement program for union and
   management employees.
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)


                                                  Special Items
                                           ---------------------------
                              Six Months
                                 Ended
                             June 30, 2008                 Asset
                                (GAAP)     Restructuring  Impairment
                             -----------------------------------------
                                                 A            B
 Revenue                           $699.7            $-          $-

 Costs and expenses
  Cost of services and
   products                         318.8             -           -
  Selling, general and
   administrative                   142.3             -           -
  Depreciation and
   amortization                      75.0             -           -
  Restructuring charges              25.4         (25.4)          -
  Asset impairment                    1.2             -        (1.2)
                             ------------- ------------- -----------
       Operating income             137.0          25.4         1.2

 Interest expense                    71.1             -           -
 Other income, net                   (1.4)            -           -
                             ------------- ------------- -----------

 Income before income taxes          67.3          25.4         1.2
 Income tax expense                  28.8          10.2         0.5
                             ------------- ------------- -----------

 Net income                          38.5          15.2         0.7

 Preferred stock dividends            5.2             -           -
                             ------------- ------------- -----------

 Net income applicable to
  common shareowners                $33.3         $15.2        $0.7
                             ============= ============= ===========


 Weighted average diluted
  common shares                     250.8         250.8       250.8
                             ============= ============= ===========

 Diluted earnings per common
  share                             $0.13         $0.06       $0.00
                             ============= ============= ===========




                                         Special Items
                                        ---------------
                                                          Six Months
                                                            Ended
                                                        June 30, 2008
                                            Gain on     Before Special
                                              Debt          Items
                                         Extinguishment   (Non-GAAP)
                                        ------------------------------
                                               C
 Revenue                                            $-         $699.7

 Costs and expenses
  Cost of services and products                      -          318.8
  Selling, general and administrative                -          142.3
  Depreciation and amortization                      -           75.0
  Restructuring charges                              -              -
  Asset impairment                                   -              -
                                        --------------- --------------
      Operating income                               -          163.6

 Interest expense                                    -           71.1
 Other income, net                                 1.2           (0.2)
                                        --------------- --------------

 Income before income taxes                       (1.2)          92.7
 Income tax expense                               (0.5)          39.0
                                        --------------- --------------

 Net income                                       (0.7)          53.7

 Preferred stock dividends                           -            5.2
                                        --------------- --------------

 Net income applicable to common
  shareowners                                    $(0.7)          48.5
                                        =============== ==============


 Weighted average diluted common shares          250.8          250.8
                                        =============== ==============

 Diluted earnings per common share               $0.00          $0.19
                                        =============== ==============



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

A Charge related to voluntary early retirement program for union and
   management employees.

B Asset impairment charge for discontinued software.

C Gain on extinguishment of 8 3/8% Senior Subordinated Notes.
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                    Special Items
                                    -------------
                                                         Three
                          Three                       Months Ended
                      Months Ended                   June 30, 2007
                      June 30, 2007               Before Special Items
                         (GAAP)                        (Non-GAAP)
                      ------------- ------------- --------------------
                                          A
 Revenue                     $329.1            $-               $329.1

 Costs and expenses
  Cost of services and
   products                   145.3             -                145.3
  Selling, general and
   administrative              65.8             -                 65.8
  Depreciation and
   amortization                36.8             -                 36.8
  Restructuring                 0.1             -                  0.1
                      ------------- ------------- --------------------
      Operating income         81.1             -                 81.1

 Interest expense              39.0             -                 39.0
 Other income, net            (0.2)             -                (0.2)
                      ------------- ------------- --------------------

 Income before income
  taxes                        42.3             -                 42.3
 Income tax expense            18.1             -                 18.1
                      ------------- ------------- --------------------

 Net income                    24.2             -                 24.2

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

 Net income applicable
  to common
  shareowners                 $21.6            $-                $21.6
                      ============= ------------- ====================


 Weighted average
  diluted common
  shares                      257.6         257.6                257.6
                      ============= ============= ====================

 Diluted earnings per
  common share                $0.08            $-                $0.08
                      ============= ============= ====================


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

A There were no special items in the second quarter of 2007.
Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                     Special Items
                                ------------------------
                                                          Six Months
                                                             Ended
                   Six Months                            June 30, 2007
                      Ended                   Dividend      Before
                  June 30, 2007 Restructuring    From    Special Items
                     (GAAP)        Charge     Investment  (Non-GAAP)
                                      A           B
  Revenue               $644.4            $-         $-        $644.4

  Costs and
   expenses
   Cost of
    services and
    products             278.4             -          -         278.4
   Selling,
    general and
    administrative       131.3             -          -         131.3
   Depreciation
    and
    amortization          73.2             -          -          73.2
   Restructuring           2.6          (2.6)         -             -
                  ------------- ------------- ---------- -------------
     Operating
      income             158.9           2.6          -         161.5

  Interest expense        79.1             -          -          79.1
  Other income,
   net                    (2.2)            -        1.9          (0.3)
                  ------------- ------------- ---------- -------------

  Income before
   income taxes           82.0           2.6       (1.9)         82.7
  Income tax
   expense                35.3           1.0       (0.8)         35.5
                  ------------- ------------- ---------- -------------

  Net income              46.7           1.6       (1.1)         47.2

  Preferred stock
   dividends               5.2             -          -           5.2
                  ------------- ------------- ---------- -------------

  Net income
   applicable to
   common
   shareowners           $41.5          $1.6      $(1.1)        $42.0
                  ============= ============= ========== =============


  Weighted average
   diluted common
   shares                256.4         256.4      256.4         256.4
                  ============= ============= ========== =============

  Diluted earnings
   per common
   share                 $0.16         $0.01     $(0.01)        $0.16
                  ============= ============= ========== =============


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

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



  2008 Operating Income (GAAP) Guidance                           $300

 Add:
    Depreciation and amortization                                  156
    Restructuring charges                                           28
    Asset impairment                                                 1
                                                                  ----

  2008 Adjusted EBITDA Guidance                                   $485
                                                                  ====

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

SOURCE: Cincinnati Bell Inc.