Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 4, 2017


 
CINCINNATI BELL INC.
(Exact Name of Registrant as Specified in its Charter)


 
 
 
 
 
 
Ohio
 
001-8519
 
31-1056105
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
221 East Fourth Street
Cincinnati, OH 45202
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (513) 397-9900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. o





Section 2 - Financial Information

Item 2.02     Results of Operations and Financial Condition

On August 4, 2017, Cincinnati Bell Inc. reported its financial results for the second quarter 2017. The earnings release is attached as Exhibit 99.1.
 
Section 7 - Regulation FD
 
Item 7.01     Regulation FD Disclosure
 
On August 4, 2017, Leigh R. Fox, the Company's president and chief executive officer, and Andrew R. Kaiser, the Company's chief financial officer, will present second quarter 2017 results. The presentation will be webcast both live and on-demand. To listen, go to the Investor Relations section of www.cincinnatibell.com, click on the Webcasts/Presentations tab and follow the instructions for accessing the webcast.
A copy of the presentation to be made during the meeting is attached to this Current Report as Exhibit 99.2.
The information in Items 2.02 and 7.01 and the exhibits attached to this Current Report as Exhibit 99.1 and 99.2 are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934 or otherwise subject to the liabilities of that Section nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Act of 1934, except as shall be expressly stated by specific reference in such filing.
 
Item 9.01    Financial Statements and Exhibits.

(c)
Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 99.1
Press release dated August 4, 2017
 
 
 
 
Exhibit 99.2
Presentation made during the Cincinnati Bell second quarter 2017 earnings conference call on August 4, 2017






Cautionary Statement Concerning Forward-Looking Statements


This report and the documents incorporated by reference herein contain forward-looking statements regarding future events and results that are subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” or variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, anticipated growth and trends in businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents the company filed with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements for any reason. The forward-looking statements included in this report represent company estimates as of August 4, 2017. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
 
CINCINNATI BELL INC.
 
 
 
 
 
Date:
August 4, 2017
 
By:
/s/ Christopher J. Wilson
 
 
 
 
Christopher J. Wilson
 
 
 
 
Vice President and General Counsel




EXHIBIT INDEX

Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
99.1
Press release dated August 4, 2017
 
 
99.2
Presentation made during the Cincinnati Bell second quarter 2017 earnings conference call on August 4, 2017



Exhibit


Cincinnati Bell Reports Second Quarter 2017 Results

HIGHLIGHTS
Strategic revenue of $171 million, up 9% year-over-year, highlighting continued strong demand for Fioptics and cloud services
Entertainment and Communications revenue of $201 million, up 5% year-over-year
Fioptics internet subscribers up 22% and Fioptics video subscribers up 13% year-over-year
Cash provided by operating activities totaled $123 million year-to-date, up $25 million year-over-year
Free cash flows1 totaled $30 million year-to-date, up $47 million compared to the prior year
Announced planned mergers with Hawaiian Telcom and OnX Enterprise Solutions to accelerate Cincinnati Bell's leadership in fiber growth and IT cloud migration through enhanced scale and diversification

CINCINNATI - August 4, 2017 - Cincinnati Bell Inc. (NYSE:CBB), today announced financial results for its second quarter, ended June 30, 2017.

Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, commented, "Our strong financial performance this quarter demonstrates our ability to continue to win with fiber as we successfully transition customers to an infrastructure that supports high-density data transmission. We are also encouraged by the continued demand for our strategic IT solutions and cloud services as we transition to becoming a leading cloud integrator for both voice and data. Importantly, the recently announced combinations with Hawaiian Telcom and OnX provide increased geographic and customer diversification to further capitalize on these secular trends.”

CONSOLIDATED RESULTS  
Consolidated revenue for the second quarter of 2017 was $294 million, down 2% from the prior year as strategic revenue growth was offset by lower Telecom and IT hardware sales and legacy declines.
Operating income was $21 million in the second quarter of 2017, compared to $27 million in the prior year period. The decline was primarily driven by $4 million of restructuring and severance related charges associated with cost-out initiatives, and $2 million of transaction costs incurred in the second quarter of 2017. The Company anticipates the restructuring and related cost-out initiatives will generate cash savings of more than $10 million annually. Adjusted EBITDA2 totaled $77 million for the second quarter of 2017, increasing 1% year-over-year.
Net income for the second quarter of 2017 totaled $2 million, resulting in a net loss per diluted share of $0.01. 






Entertainment and Communications Segment
Entertainment and Communications revenue of $201 million, up $9 million year-over-year, including $5 million of revenue from a one-time fiber build project completed in the second quarter
Fioptics revenue of $77 million, up 24% year-over-year
Q2 Fioptics internet subscribers totaled 214,100, up 22% year-over-year
Q2 Fioptics video subscribers were 142,800, up 13% year-over-year
Strategic business and carrier revenue of $57 million, up 16% year-over-year 
Operating income of $26 million, compared to $27 million in the prior year
Adjusted EBITDA of $74 million, up 3% year-over-year

Year-to-date, the Company passed an additional 23,300 new addresses with its Fioptics suite of products, which is now available to 556,700 homes and businesses, reaching approximately 70% of Greater Cincinnati. Cincinnati Bell’s continued investments in fiber further differentiate the Company from traditional carriers in a heightened competitive environment, and allow the Company to offer higher bandwidth and faster internet speed than its competition.
In an extension of its strategic investment in fiber assets, during the second quarter of 2017, Cincinnati Bell announced its pending merger with Hawaiian Telcom, the leading integrated communications provider serving the state of Hawaii, for a total consideration of approximately $650 million including net debt of Hawaiian Telcom as of March 31, 2017. The combination with Hawaiian Telcom is an important step toward building scale and locking in fiber density value for shareholders and customers, as Cincinnati Bell continues to anticipate and capitalize on the growing demand for fiber capacity.

IT Services and Hardware Segment
IT Services and Hardware revenue of $96 million, up $10 million sequentially, and down $14 million year-over-year
Strategic revenue of $42 million, down $2 million sequentially and down $7 million year-over-year, reflecting increased insourcing of IT services in the Company's market
Telecom and IT hardware sales of $45 million, up $9 million sequentially
Cloud Services revenue of $12 million, up 7% year-over-year
Operating income of $1 million and Adjusted EBITDA of $7 million both decreased compared to the prior year due to a decline in revenue and increased costs associated with the expansion of the Company's national footprint






Cincinnati Bell recently announced its pending acquisition of OnX Enterprise Solutions, a technology services and solutions provider in North America and the United Kingdom, for a total consideration of $201 million. The acquisition of OnX supports the Company's transformation to a Hybrid IT provider, and is expected to add meaningful scale, service offerings, free cash flow generation, and customer diversification to Cincinnati Bell's growing IT Services and Hardware business. The expansion of the Company's geographic footprint in IT services and its ability to capitalize on the growing demand for its strategic IT solutions and Cloud Services are critical elements of the Company’s future growth strategy.

Financial Position and Cash Flow
The Company reported cash provided by operating activities of $123 million in the first six months of 2017, compared to $98 million in the same period last year. Free cash flow increased $47 million compared to the first six months of 2016 totaling $30 million for the first half of 2017. Capital expenditures were $105 million in the first half of 2017, compared to $122 million in the same period last year. The Company continues to expect full year 2017 capital expenditures to range between $180 million and $210 million.
As previously announced, Cincinnati Bell has secured committed financing, subject to customary closing conditions, from Morgan Stanley Senior Funding, Inc. and certain other arrangers, to fund a portion of the cash consideration of the Hawaiian Telcom and OnX transactions, to refinance Cincinnati Bell's term loan and Hawaiian Telcom's existing debt, and to pay related fees and expenses. Cincinnati Bell's net leverage (net debt divided by Adjusted EBITDA) is expected to remain in-line with current levels, including run-rate synergies following the transactions. Cincinnati Bell is also exploring the possibility of replacing a portion of the secured committed term loan with unsecured senior notes, subject to market conditions.

2017 Outlook
Based on its year-to-date results and current outlook for the year, Cincinnati Bell reaffirms its previous 2017 financial guidance, provided on February 15, 2017:
Category
2017 Guidance
Revenue
$1.2 billion
Adjusted EBITDA
$295 million*
*Plus or minus 2 percent

This guidance does not include any contribution from pending mergers.
Mr. Fox concluded, “We are confident in our ability to achieve our objectives for the year and capitalize on the fast-growing demand for our strategic fiber and cloud services offerings. Looking ahead, we believe the mergers with Hawaiian Telcom and OnX will provide significant geographic and customer





diversification opportunities, and we expect the creation of two distinct assets with strategic optionality to generate strong operating performance and maximize shareholder value.”

Conference Call/Webcast
Cincinnati Bell will host a conference call on August 4, 2017 at 10:00 a.m. (ET) to discuss its results for the second quarter of 2017. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. The conference call dial-in number is (888) 287-5563. Callers located outside of the U.S. and Canada may dial (719) 325-4925. A taped replay of the conference call will be available approximately one hour after the conclusion of the call until 1:00 p.m. on Friday, August 18, 2017. 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 5530931. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.

Safe Harbor Note
This release may contain “forward-looking” statements, as defined in federal securities laws including the Private Securities Litigation Reform Act of 1995, which are based on our current expectations, estimates, forecasts and projections. Statements that are not historical facts, including statements about the beliefs, expectations and future plans and strategies of the Company, are forward-looking statements. Actual results may differ materially from those expressed in any forward-looking statements. The following important factors, among other things, could cause or contribute to actual results being materially and adversely different from those described or implied by such forward-looking statements including, but not limited to: those discussed in this release; we operate in highly competitive industries, and customers may not continue to purchase products or services, which would result in reduced revenue and loss of market share; we may be unable to grow our revenues and cash flows despite the initiatives we have implemented; failure to anticipate the need for and introduce new products and services or to compete with new technologies may compromise our success in the telecommunications industry; our access lines, which generate a significant portion of our cash flows and profits, are decreasing in number and if we continue to experience access line losses similar to the past several years, our revenues, earnings and cash flows from operations may be adversely impacted; our failure to meet performance standards under our agreements could result in customers terminating their relationships with us or customers being entitled to receive financial compensation, which would lead to reduced revenues and/or increased costs; we generate a substantial portion of our revenue by serving a limited geographic area; a large customer accounts for a significant portion of our revenues and accounts receivable and the loss or significant reduction in business from this customer would cause operating revenues to decline and could negatively impact profitability and cash flows; maintaining our telecommunications networks requires significant capital expenditures, and our inability or failure to maintain our telecommunications networks





could have a material impact on our market share and ability to generate revenue; increases in broadband usage may cause network capacity limitations, resulting in service disruptions or reduced capacity for customers; we may be liable for material that content providers distribute on our networks; cyber attacks or other breaches of network or other information technology security could have an adverse effect on our business; natural disasters, terrorists acts or acts of war could cause damage to our infrastructure and result in significant disruptions to our operations; the regulation of our businesses by federal and state authorities may, among other things, place us at a competitive disadvantage, restrict our ability to price our products and services and threaten our operating licenses; we depend on a number of third party providers, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers; a failure of back-office information technology systems could adversely affect our results of operations and financial condition; if we fail to extend or renegotiate our collective bargaining agreements with our labor union when they expire or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed; the loss of any of the senior management team or attrition among key sales associates could adversely affect our business, financial condition, results of operations and cash flows; our debt could limit our ability to fund operations, raise additional capital, and fulfill our obligations, which, in turn, would have a material adverse effect on our businesses and prospects generally; our indebtedness imposes significant restrictions on us; we depend on our loans and credit facilities to provide for our short-term financing requirements in excess of amounts generated by operations, and the availability of those funds may be reduced or limited; the servicing of our indebtedness is dependent on our ability to generate cash, which could be impacted by many factors beyond our control; we depend on the receipt of dividends or other intercompany transfers from our subsidiaries and investments; the trading price of our common shares may be volatile, and the value of an investment in our common shares may decline; the uncertain economic environment, including uncertainty in the U.S. and world securities markets, could impact our business and financial condition; our future cash flows could be adversely affected if it is unable to fully realize our deferred tax assets; adverse changes in the value of assets or obligations associated with our employee benefit plans could negatively impact shareowners’ deficit and liquidity; third parties may claim that we are infringing upon their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products; third parties may infringe upon our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury; we could be subject to a significant amount of litigation, which could require us to pay significant damages or settlements; we could incur significant costs resulting from complying with, or potential violations of, environmental, health and human safety laws; the timing and likelihood of completion of our proposed mergers with Hawaiian Telcom and OnX, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed transactions that could reduce anticipated benefits or cause the parties to abandon the transactions; the possibility that Hawaiian Telcom’s stockholders may not approve the proposed merger; the possibility that





competing offers or acquisition proposals for Hawaiian Telcom will be made; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transactions; the possibility that the expected synergies and value creation from the proposed transactions will not be realized or will not be realized within the expected time period; the risk that the businesses of the Company and Hawaiian Telcom and OnX will not be integrated successfully; disruption from the proposed transactions making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; and the possibility that the proposed transactions do not close, including due to the failure to satisfy the closing conditions and the other risks and uncertainties detailed in our filings, including our Form 10-K, with the SEC as well as Hawaiian Telcom’s filings, including its Form 10-K, with the SEC.

These forward-looking statements are based on information, plans and estimates as of the date hereof and there may be other factors that may cause our actual results to differ materially from these forward-looking statements. We assume no obligation to update the information contained in this release except as required by applicable law.

Use of Non-GAAP Financial Measures
This press release contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt, net income excluding special items and free cash flow. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com.

1Free cash flow provides a useful measure of operational performance, liquidity and financial health.  The company defines free cash flow as cash provided by (used in) operating activities, adjusted for capital expenditures, restructuring and severance related payments, preferred stock dividends, dividends received from CyrusOne, cash used in or (provided by) discontinued operations, including the decommission of wireless towers, and transaction costs.  Free cash flow should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities, or the change in cash on the balance sheet and may not be comparable with free cash flow as defined by other companies. Although the company feels there is no comparable GAAP measure for free cash flow, the attached financial information reconciles cash provided by operating activities to free cash flow.






2Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP operating income plus depreciation, amortization, restructuring and severance related charges, (gain) loss on sale or disposal of assets, transaction costs, curtailment (gain) loss, asset impairments, components of pension and other retirement plan costs (including interest costs, asset returns, and amortization of actuarial gains and losses), and other special items. Adjusted EBITDA should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.

Adjusted EBITDA margin provides a useful measure of operational performance. The company defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Adjusted EBITDA margin should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.

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, unamortized premium and/or discount and unamortized note issuance costs, offset by cash and cash equivalents.

Net income applicable to common shareholders excluding special items in total and per share provides a useful measure of operating performance. Net income applicable to common shareholders 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 Inc. (CBB) provides integrated communications solutions – including local and long distance voice, data, high-speed Internet and video – that keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world. In addition, enterprise customers across the United States rely on CBTS, a wholly-owned subsidiary, for efficient, scalable office communications systems and end-to-end IT solutions. For more information, please visit www.cincinnatibell.com.





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
294.0

 
$
299.2

 
$
(5.2
)
 
(2)%
 
$
572.2

 
$
588.1

 
$
(15.9
)
 
(3)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
165.4

 
170.8

 
(5.4
)
 
(3)%
 
320.2

 
333.5

 
(13.3
)
 
(4)%
 
 
Selling, general and administrative
 
55.4

 
56.2

 
(0.8
)
 
(1)%
 
112.1

 
109.4

 
2.7

 
2%
 
 
Depreciation and amortization
 
47.0

 
44.8

 
2.2

 
5%
 
92.8

 
88.2

 
4.6

 
5%
 
 
Restructuring and severance related charges
 
3.6

 

 
3.6

 
n/m
 
29.2

 

 
29.2

 
n/m
 
 
Other
 
1.7

 

 
1.7

 
n/m
 
2.3

 

 
2.3

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
20.9

 
27.4

 
(6.5
)
 
(24)%
 
15.6

 
57.0

 
(41.4
)
 
(73)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
18.1

 
19.9

 
(1.8
)
 
(9)%
 
36.1

 
40.2

 
(4.1
)
 
(10)%
 
Loss on extinguishment of debt, net
 

 
5.2

 
(5.2
)
 
n/m
 

 
2.8

 
(2.8
)
 
n/m
 
Gain on sale of Investment in CyrusOne
 

 
(118.6
)
 
118.6

 
n/m
 
(117.7
)
 
(118.6
)
 
0.9

 
(1)%
 
Other income, net
 
(0.6
)
 
(1.1
)
 
0.5

 
(45)%
 
(1.0
)
 
(1.1
)
 
0.1

 
(9)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
3.4

 
122.0

 
(118.6
)
 
(97)%
 
98.2

 
133.7

 
(35.5
)
 
(27)%
 
Income tax expense
 
1.3

 
44.4

 
(43.1
)
 
(97)%
 
35.7

 
49.1

 
(13.4
)
 
(27)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
2.1

 
77.6

 
(75.5
)
 
(97)%
 
62.5

 
84.6

 
(22.1
)
 
(26)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
 
2.6

 
2.6

 

 
0%
 
5.2

 
5.2

 

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners
 
$
(0.5
)
 
$
75.0

 
$
(75.5
)
 
n/m
 
$
57.3

 
$
79.4

 
$
(22.1
)
 
(28)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net (loss) earnings per common share
 
$
(0.01
)
 
$
1.79

 
 
 
 
 
$
1.36

 
$
1.89

 
 
 
 
 
Diluted net (loss) earnings per common share
 
$
(0.01
)
 
$
1.78

 
 
 
 
 
$
1.35

 
$
1.89

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Basic
 
42.2

 
42.0

 
 
 
 
 
42.1

 
42.0

 
 
 
 
 
 
 - Diluted
 
42.2

 
42.1

 
 
 
 
 
42.3

 
42.1

 
 
 
 






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Statements by Segment
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
2017

2016
 
$
 
%
 
2017
 
2016
 
$
 
%
 
Entertainment and Communications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
87.7

 
$
86.8

 
$
0.9

 
1%
 
$
175.3

 
$
172.0

 
$
3.3

 
2%
 
 
Voice
 
67.1

 
69.1

 
(2.0
)
 
(3)%
 
134.8

 
139.3

 
(4.5
)
 
(3)%
 
 
Video
 
37.2

 
30.9

 
6.3

 
20%
 
73.2

 
59.9

 
13.3

 
22%
 
 
Services and Other
 
9.4

 
5.7

 
3.7

 
65%
 
13.4

 
11.6

 
1.8

 
16%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
201.4

 
192.5

 
8.9

 
5%
 
396.7

 
382.8

 
13.9

 
4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
95.8

 
88.3

 
7.5

 
8%
 
189.1

 
176.1

 
13.0

 
7%
 
 
Selling, general and administrative
 
34.7

 
35.4

 
(0.7
)
 
(2)%
 
70.7

 
70.0

 
0.7

 
1%
 
 
Depreciation and amortization
 
43.2

 
41.6

 
1.6

 
4%
 
85.2

 
81.8

 
3.4

 
4%
 
 
Other*
 
1.3

 

 
1.3

 
n/m
 
26.9

 

 
26.9

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
175.0

 
165.3

 
9.7

 
6%
 
371.9

 
327.9

 
44.0

 
13%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
26.4

 
$
27.2

 
$
(0.8
)
 
(3)%
 
$
24.8

 
$
54.9

 
$
(30.1
)
 
(55)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IT Services and Hardware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
$
23.5

 
$
27.2

 
$
(3.7
)
 
(14)%
 
$
45.2

 
$
53.4

 
$
(8.2
)
 
(15)%
 
 
Management and Monitoring
 
5.1

 
7.9

 
(2.8
)
 
(35)%
 
10.1

 
16.0

 
(5.9
)
 
(37)%
 
 
Unified Communications
 
11.0

 
10.1

 
0.9

 
9%
 
20.9

 
20.2

 
0.7

 
3%
 
 
Cloud Services
 
11.6

 
10.8

 
0.8

 
7%
 
25.3

 
21.0

 
4.3

 
20%
 
 
Telecom and IT hardware
 
44.8

 
53.8

 
(9.0
)
 
(17)%
 
80.7

 
101.7

 
(21.0
)
 
(21)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
96.0


109.8

 
(13.8
)
 
(13)%
 
182.2

 
212.3

 
(30.1
)
 
(14)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
72.7

 
85.5

 
(12.8
)
 
(15)%
 
137.4

 
164.1

 
(26.7
)
 
(16)%
 
 
Selling, general and administrative
 
16.7

 
14.2

 
2.5

 
18%
 
31.9

 
27.7

 
4.2

 
15%
 
 
Depreciation and amortization
 
3.7

 
3.2

 
0.5

 
16%
 
7.5

 
6.4

 
1.1

 
17%
 
 
Other*
 
2.3

 

 
2.3

 
n/m
 
2.3

 

 
2.3

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
95.4

 
102.9

 
(7.5
)
 
(7)%
 
179.1

 
198.2

 
(19.1
)
 
(10)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
0.6

 
$
6.9

 
$
(6.3
)
 
(91)%
 
$
3.1

 
$
14.1

 
$
(11.0
)
 
(78)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Other includes restructuring and severance related charges.






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
Entertainment and Communications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
31.2

 
$
25.2

 
$
6.0

 
24%
 
$
61.0

 
$
48.7

 
$
12.3

 
25%
 
 
 
Voice
 
6.1

 
5.4

 
0.7

 
13%
 
12.0

 
10.6

 
1.4

 
13%
 
 
 
Video
 
36.5

 
30.4

 
6.1

 
20%
 
71.9

 
58.9

 
13.0

 
22%
 
 
 
Services and other
 
0.4

 
0.9

 
(0.5
)
 
(56)%
 
0.8

 
1.8

 
(1.0
)
 
(56)%
 
 
 
 
 
74.2

 
61.9

 
12.3

 
20%
 
145.7

 
120.0

 
25.7

 
21%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
9.0

 
11.8

 
(2.8
)
 
(24)%
 
18.6

 
24.0

 
(5.4
)
 
(23)%
 
 
 
Voice
 
16.9

 
18.7

 
(1.8
)
 
(10)%
 
34.7

 
38.5

 
(3.8
)
 
(10)%
 
 
 
Services and other
 
0.7

 
1.1

 
(0.4
)
 
(36)%
 
1.5

 
2.2

 
(0.7
)
 
(32)%
 
 
 
 
 
26.6

 
31.6

 
(5.0
)
 
(16)%
 
54.8

 
64.7

 
(9.9
)
 
(15)%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Services and other
 

 
1.0

 
(1.0
)
 
n/m
 
0.1

 
2.1

 
(2.0
)
 
(95)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total consumer revenue
 
$
100.8

 
$
94.5

 
$
6.3

 
7%
 
$
200.6

 
$
186.8

 
$
13.8

 
7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
24.9

 
$
24.0

 
$
0.9

 
4%
 
$
49.8

 
$
47.6

 
$
2.2

 
5%
 
 
 
Voice
 
15.4

 
12.5

 
2.9

 
23%
 
30.0

 
24.5

 
5.5

 
22%
 
 
 
Video
 
0.7

 
0.5

 
0.2

 
40%
 
1.3

 
1.0

 
0.3

 
30%
 
 
 
Services and other
 
0.6

 
0.5

 
0.1

 
20%
 
1.1

 
0.9

 
0.2

 
22%
 
 
 
 
 
41.6

 
37.5

 
4.1

 
11%
 
82.2

 
74.0

 
8.2

 
11%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
4.7

 
5.1

 
(0.4
)
 
(8)%
 
9.2

 
10.5

 
(1.3
)
 
(12)%
 
 
 
Voice
 
24.7

 
28.4

 
(3.7
)
 
(13)%
 
50.1

 
57.4

 
(7.3
)
 
(13)%
 
 
 
Services and other
 
0.2

 
0.3

 
(0.1
)
 
(33)%
 
0.5

 
0.6

 
(0.1
)
 
(17)%
 
 
 
 
 
29.6

 
33.8

 
(4.2
)
 
(12)%
 
59.8

 
68.5

 
(8.7
)
 
(13)%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Services and other
 
0.4

 
0.5

 
(0.1
)
 
(20)%
 
0.7

 
0.9

 
(0.2
)
 
(22)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total business revenue
 
$
71.6

 
$
71.8

 
$
(0.2
)
 
0%
 
$
142.7

 
$
143.4

 
$
(0.7
)
 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrier
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
10.1

 
$
11.6

 
$
(1.5
)
 
(13)%
 
$
20.8

 
$
22.6

 
$
(1.8
)
 
(8)%
 
 
 
Services and other
 
5.4

 

 
5.4

 
n/m
 
5.4

 

 
5.4

 
n/m
 
 
 
 
 
15.5

 
11.6

 
3.9

 
34%
 
26.2

 
$
22.6

 
3.6

 
16%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
7.8

 
9.1

 
(1.3
)
 
(14)%
 
15.9

 
18.6

 
(2.7
)
 
(15)%
 
 
 
Voice
 
4.0

 
4.1

 
(0.1
)
 
(2)%
 
8.0

 
8.3

 
(0.3
)
 
(4)%
 
 
 
Services and other
 
1.7

 
1.4

 
0.3

 
21%
 
3.3

 
3.1

 
0.2

 
6%
 
 
 
 
 
13.5

 
14.6

 
(1.1
)
 
(8)%
 
27.2

 
30.0

 
(2.8
)
 
(9)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total carrier revenue
 
$
29.0

 
$
26.2

 
$
2.8

 
11%
 
$
53.4

 
$
52.6

 
$
0.8

 
2%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Entertainment and Communications
 
$
201.4

 
$
192.5

 
$
8.9

 
5%
 
$
396.7

 
$
382.8

 
$
13.9

 
4%






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
IT Services and Hardware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
$
18.4

 
$
23.1

 
$
(4.7
)
 
(20)%
 
$
36.7

 
$
45.4

 
$
(8.7
)
 
(19)%
 
 
 
Management and Monitoring
 
5.1

 
7.9

 
(2.8
)
 
(35)%
 
10.1

 
16.0

 
(5.9
)
 
(37)%
 
 
 
Unified Communications
 
7.4

 
7.3

 
0.1

 
1%
 
14.5

 
14.8

 
(0.3
)
 
(2)%
 
 
 
Cloud Services
 
11.6

 
10.8

 
0.8

 
7%
 
25.3

 
21.0

 
4.3

 
20%
 
 
 
 
 
42.5

 
49.1

 
(6.6
)
 
(13)%
 
86.6

 
97.2

 
(10.6
)
 
(11)%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
5.1

 
4.1

 
1.0

 
24%
 
8.5

 
8.0

 
0.5

 
6%
 
 
 
Unified Communications
 
3.6

 
2.8

 
0.8

 
29%
 
6.4

 
5.4

 
1.0

 
19%
 
 
 
Telecom and IT hardware
 
44.8

 
53.8

 
(9.0
)
 
(17)%
 
80.7

 
101.7

 
(21.0
)
 
(21)%
 
 
 
 
 
53.5

 
60.7

 
(7.2
)
 
(12)%
 
95.6

 
115.1

 
(19.5
)
 
(17)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total IT Services and Hardware Revenue
 
$
96.0

 
$
109.8

 
$
(13.8
)
 
(13)%
 
$
182.2

 
$
212.3

 
$
(30.1
)
 
(14)%







Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Six Months Ended
 
 
 
 
 
 
 
 
June 30,
 
Change
 
June 30,
 
Change
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
201.4

 
$
192.5

 
$
8.9

 
5%
 
$
396.7

 
$
382.8

 
$
13.9

 
4%
 
 
IT Services and Hardware
 
96.0

 
109.8

 
(13.8
)
 
(13)%
 
182.2

 
212.3

 
(30.1
)
 
(14)%
 
 
Eliminations
 
(3.4
)
 
(3.1
)
 
(0.3
)
 
10%
 
(6.7
)
 
(7.0
)
 
0.3

 
(4)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
$
294.0

 
$
299.2

 
$
(5.2
)
 
(2)%
 
$
572.2

 
$
588.1

 
$
(15.9
)
 
(3)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Services and Products
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
95.8

 
$
88.3

 
$
7.5

 
8%
 
$
189.1

 
$
176.1

 
$
13.0

 
7%
 
 
IT Services and Hardware
 
72.7

 
85.5

 
(12.8
)
 
(15)%
 
137.4

 
164.1

 
(26.7
)
 
(16)%
 
 
Eliminations
 
(3.1
)
 
(3.0
)
 
(0.1
)
 
3%
 
(6.3
)
 
(6.7
)
 
0.4

 
(6)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total cost of services and products
 
$
165.4

 
$
170.8

 
$
(5.4
)
 
(3)%
 
$
320.2

 
$
333.5

 
$
(13.3
)
 
(4)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, General and Administrative
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
34.7

 
$
35.4

 
$
(0.7
)
 
(2)%
 
$
70.7

 
$
70.0

 
$
0.7

 
1%
 
 
IT Services and Hardware
 
16.7

 
14.2

 
2.5

 
18%
 
31.9

 
27.7

 
4.2

 
15%
 
 
Corporate and eliminations
 
4.0

 
6.6

 
(2.6
)
 
<