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: February 15, 2018


 
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 February 15, 2018, Cincinnati Bell Inc. reported its financial results for the fourth quarter and full year 2017. The earnings release is attached as Exhibit 99.1.
 
Section 7 - Regulation FD
 
Item 7.01     Regulation FD Disclosure
 
On February 15, 2018, Leigh R. Fox, the Company's president and chief executive officer, and Andrew R. Kaiser, the Company's chief financial officer, will present fourth quarter and full year 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
 
 
 
 
 
 
 
 
 
 
 
 
Press release dated February 15, 2018
 
 
 
 
Presentation made during the Cincinnati Bell fourth quarter and full year 2017 earnings conference call on February 15, 2018






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 February 15, 2018 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:
 
By:
/s/ Christopher J. Wilson
 
 
 
 
Christopher J. Wilson
 
 
 
 
Vice President and General Counsel




EXHIBIT INDEX

Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
99.1
Press release dated February 15, 2018
 
 
99.2
Presentation made during the Cincinnati Bell fourth quarter and full year 2017 earnings conference call on February 15, 2018.



Exhibit


Cincinnati Bell Reports Fourth Quarter and Full Year 2017 Results

FULL YEAR 2017 HIGHLIGHTS
Increased video and internet subscribers
Video subscribers totaled 146,500, up 8,900 year-over-year
Internet subscribers totaled 308,700, up 5,500 year-over-year
Revenue of $1,289 million, and Adjusted EBITDA1 of $303 million
Net income totaled $35 million, resulting in diluted earnings per share of $0.58
Cash provided by operating activities totaled $203 million, up $30 million year-over-year
Free cash flows2 totaled $28 million, up $141 million year-over-year
FOURTH QUARTER 2017 HIGHLIGHTS
Revenue of $427 million and Adjusted EBITDA of $78 million
Strategic revenue of $201 million, up 21%, with Fioptics revenue increasing 17% year-over-year
Entertainment and Communications revenue of $197 million, up 2% year-over-year
IT Services and Hardware revenue of $233 million, including a $150 million contribution from the OnX Enterprise Solutions acquisition
Received merger approval from Hawaiian Telcom shareholders and State of Hawaii Department of Commerce and Consumer Affairs "DCCA" Cable Television Division

CINCINNATI - February 15, 2018 - Cincinnati Bell Inc. (NYSE:CBB), today announced financial results for its full year and fourth quarter, ended December 31, 2017.  For the full year, strategic revenue increased from $638 million to $705 million, driven by strong demand for fiber-based products and $32 million of OnX strategic revenue. Fioptics internet subscribers totaled 226,600 at the end of the fourth quarter, up 5,400 compared to the end of the third quarter of 2017.  Fioptics video subscribers totaled 146,500, up 3,000 from the previous quarter.  During the year, the Company passed an additional 38,800 addresses with Fioptics, which is now available to 572,200 homes and businesses, or approximately 70% of Greater Cincinnati.
Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, commented, "Our strong full year performance demonstrates the solid progress we have made in executing our growth strategy. This was an important year for Cincinnati Bell as we focused on building two distinct, complementary lines of business with expanded geographic reach, customer diversification and increased runway for growth.”
Mr. Fox continued, “Central to this strategy has been the previously announced mergers with OnX and Hawaiian Telcom. These combinations bring meaningful scale to their respective businesses and position us to capitalize on the fast-growing demand for strategic fiber and cloud services offerings. We





have successfully completed the acquisition of OnX and integration efforts continue to progress well. I am also pleased to report that we received overwhelming support from Hawaiian Telcom shareholders and the pending merger has made significant headway in gaining the necessary regulatory approvals.”
CONSOLIDATED RESULTS  
Consolidated revenue totaled $427 million for the fourth quarter of 2017 and $1,289 million for the full year.
Operating income was $10 million in the fourth quarter of 2017, compared to $11 million in the prior year period. Full year operating income totaling $38 million, decreased from the prior year due to restructuring and severance related charges as well as transaction and integration costs. Adjusted EBITDA totaled $78 million for the fourth quarter of 2017, and $303 million for the full year, in line with the Company’s 2017 revised guidance.
Net loss for the fourth quarter of 2017 totaled $16 million, resulting in diluted loss per share of $0.45. Net income for the full year totaled $35 million, or $0.58 per diluted share.
Entertainment and Communications Segment
Entertainment and Communications revenue totaled $197 million for the fourth quarter of 2017 and $790 million for the full year, up $4 million and $21 million year-over-year, respectively.
Fioptics revenue totaled $80 million for the fourth quarter, a 17% increase year-over-year, and $310 million for the full year, a 22% increase compared to a year ago.
Strategic revenue for business and carrier customers totaled $55 million for the fourth quarter and $217 million for the full year, up 7% and 9% year-over-year, respectively.
Operating income was $16 million for the fourth quarter of 2017, up $1 million compared to a year ago. Full year operating income totaling $65 million decreased from the prior year due to increased restructuring and severance related charges.
Adjusted EBITDA was $70 million for the fourth quarter of 2017, consistent with the prior year period. Full year Adjusted EBITDA totaled $287 million, up $4 million compared to a year ago.
Cincinnati Bell’s continued strategic investments in fiber allow the Company to expand its portfolio of high density, next-generation fiber to benefit from the growing demand for data capacity and lock in fiber density value for shareholders and customers. In the fourth quarter of 2017, Cincinnati Bell completed several critical milestones regarding the approval process of its pending merger with Hawaiian Telcom. On November 7, 2017, Hawaiian Telcom shareholders overwhelmingly approved the transaction. The merger also cleared the Hart-Scott-Rodino Act review period in November, and received approval from the State of Hawaii DCCA Cable Division on December 8, 2017. Regulatory review processes are also underway with the Federal Communications Commission and the Public Utilities Commission of the State of Hawaii. The merger approval process continues to progress as anticipated and the transaction is





expected to close in the second half of 2018. The Company has secured the necessary financing to fund the cash portion of the transaction, refinance existing Hawaiian Telcom indebtedness and pay fees and expenses in connection with the foregoing.
IT Services and Hardware Segment
IT Services and Hardware revenue totaled $233 million for the fourth quarter of 2017 and $512 million for the full year, up $138 million and $81 million year-over-year, respectively. IT Services and Hardware revenue in the fourth quarter reflects a $150 million contribution from the OnX acquisition, which mitigated the ongoing declines in hardware sales as well as cost cutting initiatives by a large customer.
Strategic revenue totaled $72 million for the fourth quarter, of which OnX contributed $32 million. Full year strategic revenue totaled $199 million up 1% year-over-year.
Telecom and IT hardware revenue was $155 million for the fourth quarter of 2017, up $118 million compared to the prior year period, driven by the incremental contribution from OnX. Full year Telecom and IT hardware revenue was $280 million, up $75 million compared to the prior year.
Operating income was $3 million for the fourth quarter of 2017 and $11 million for the full year, up $1 million and down $13 million year-over-year, respectively. OnX operating income totaled $2 million in the fourth quarter of 2017.
Adjusted EBITDA was $12 million for the fourth quarter, up $4 million from the prior year, including an $8 million contribution from OnX. Full year Adjusted EBITDA totaled $34 million, down $7 million compared to a year ago.
In the beginning of the fourth quarter of 2017, Cincinnati Bell announced the successful completion of its acquisition of OnX Enterprise Solutions, and integration plans are progressing well. The combination of CBTS and OnX supports the Company’s transformation to a leading North American hybrid IT solutions provider, with an expanded footprint of 20+ IT sales offices and addition of approximately 2,000 new customers in Canada and throughout the United States. The combined company’s hosted and managed IT services portfolio coupled with its enhanced scale uniquely positions Cincinnati Bell to capitalize on significant market opportunities presented by UCaaS, cloud, security, and infrastructure needs.
Financial Position and Cash Flow
The Company reported cash provided by operating activities of $203 million for the full year 2017, compared to $173 million in the prior year. Free cash flow totaled $28 million for the full year 2017, an increase of $141 million year-over-year. Capital expenditures were $210 million in 2017, compared to $286 million in 2016. The Company expects full year 2018 capital expenditures between $190 million and $210 million.
2018 Outlook





Cincinnati Bell is providing the following guidance for 2018:
            
Category
2018 Guidance Range
Revenue
$1,200M - $1,275M
Adjusted EBITDA
$320M - $330M
This revenue guidance reflects the new ASC 606 revenue recognition standard, effective January 1, 2018, and presents Telecom and IT Hardware sales net of product cost. For reference, had the revenue standard not been effective, our revenue guidance range would have been $1,700 million to $1,775 million.
The company's 2018 guidance does not include any contribution from pending merger with Hawaiian Telcom.
Mr. Fox concluded, “As we enter 2018, I am excited about the opportunities to further differentiate ourselves from traditional carriers in the marketplace. Our growth trajectory is supported by our continued investments in high-speed, high-bandwidth fiber networks where we are winning. The pending merger with Hawaiian Telcom represents an important step toward scaling our base of high-quality fiber assets. In addition, the combination of CBTS and OnX positions us as a leading IT solutions provider for next-generation cloud-based products and services. We look forward to building on the strategic milestones achieved in 2017 to deliver long-term value for our shareholders and customers.”
Conference Call/Webcast
Cincinnati Bell will host a conference call on February 15, 2018 at 10:00 a.m. (ET) to discuss its results for the fourth quarter and full year 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 877-795-3635. Callers located outside of the U.S. and Canada may dial 719-325-2215. To participate, please call 15 minutes prior to the start time. A taped replay of the conference call will be available approximately one hour after the conclusion of the call until 1:00 p.m. (ET) on Thursday, March 1, 2018. 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 9458851. 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 completing the merger with Hawaiian Telcom, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed transaction that could reduce anticipated benefits or cause the parties to abandon the transaction; 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 transaction; the possibility that the expected synergies and value creation from the proposed transaction involving Hawaiian Telcom 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 other acquired companies will not be integrated successfully; disruption from the proposed transaction involving Hawaiian Telcom making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; and the possibility that the proposed transaction involving Hawaiian Telcom  does 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 applicable to common shareholders excluding special items and free cash flow. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP





financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com.

1Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP operating income plus depreciation, amortization, restructuring and severance related charges, (gain) loss on sale or disposal of assets, transaction and integration 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.

2Free cash flow provides a useful measure of operational performance, liquidity and financial health.  The company defines free cash flow as cash provided by (used in) operating activities, adjusted for capital expenditures, restructuring and severance related payments, transaction and integration payments, preferred stock dividends, dividends received from CyrusOne, and cash used in or (provided by) discontinued operations, including the decommission of wireless towers.  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.

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 (loss) applicable to common shareholders excluding special items in total and per share provides a useful measure of operating performance. Net income (loss) 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 (loss) excluding special items as defined by other companies.
About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:CBB) provides integrated communications solutions - including local and long distance voice, data, high-speed Internet and video - that keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world. In addition, enterprise customers across the United States and Canada rely on CBTS and OnX, wholly-owned subsidiaries, for efficient, scalable office communications systems and end-to-end IT solutions. For more information, please visit www.cincinnatibell.com. The information on the Company’s website is not incorporated by reference in this press release.








Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
427.1

 
$
285.3

 
$
141.8

 
50%
 
$
1,288.5

 
$
1,185.8

 
$
102.7

 
9%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
278.5

 
161.6

 
116.9

 
72%
 
761.3

 
678.9

 
82.4

 
12%
 
 
Selling, general and administrative
 
74.3

 
53.8

 
20.5

 
38%
 
240.9

 
218.7

 
22.2

 
10%
 
 
Depreciation and amortization
 
52.9

 
47.5

 
5.4

 
11%
 
193.0

 
182.2

 
10.8

 
6%
 
 
Restructuring and severance related charges
 
3.5

 
11.9

 
(8.4
)
 
(71)%
 
32.7

 
11.9

 
20.8

 
n/m
 
 
Transaction and integration costs
 
4.1

 

 
4.1

 
n/m
 
18.5

 

 
18.5

 
n/m
 
 
Other
 
4.0

 

 
4.0

 
n/m
 
4.0

 
1.1

 
2.9

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
9.8

 
10.5

 
(0.7
)
 
(7)%
 
38.1

 
93.0

 
(54.9
)
 
(59)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
30.3

 
17.6

 
12.7

 
72%
 
85.2

 
75.7

 
9.5

 
13%
 
Loss on extinguishment of debt, net
 
3.2

 
4.8

 
(1.6
)
 
(33)%
 
3.2

 
19.0

 
(15.8
)
 
(83)%
 
Gain on sale of Investment in CyrusOne
 

 
(5.1
)
 
5.1

 
n/m
 
(117.7
)
 
(157.0
)
 
39.3

 
(25)%
 
Other (income) expense, net
 
(2.1
)
 
(6.4
)
 
4.3

 
(67)%
 
1.4

 
(7.6
)
 
9

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations before income taxes
 
(21.6
)
 
(0.4
)
 
(21.2
)
 
n/m
 
66.0

 
162.9

 
(96.9
)
 
(59)%
 
Income tax (benefit) expense
 
(5.4
)
 
1.2

 
(6.6
)
 
n/m
 
30.9

 
61.1

 
(30.2
)
 
(49)%
 
(Loss) income from continuing operations
 
(16.2
)
 
(1.6
)
 
(14.6
)
 
n/m
 
35.1

 
101.8

 
(66.7
)
 
(66)%
 
 
 
 
 
 
 
 
 


 

 
 
 
 
 


 

 
Income from discontinued operations, net of tax
 

 
0.3

 
(0.3
)
 
n/m
 

 
0.3

 
(0.3
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
(16.2
)
 
(1.3
)
 
(14.9
)
 
n/m
 
35.1

 
102.1

 
(67.0
)
 
(66)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
 
2.6

 
2.6

 

 
0%
 
10.4

 
10.4

 

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners
 
$
(18.8
)
 
$
(3.9
)
 
$
(14.9
)
 
n/m
 
$
24.7

 
$
91.7

 
$
(67.0
)
 
(73)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net (loss) earnings per common share
 

 

 
 
 
 
 

 

 
 
 
 
 
 
 
(Loss) earnings from continuing operations
 
$
(0.45
)
 
$
(0.10
)
 
 
 
 
 
$
0.59

 
$
2.17

 
 
 
 
 
 
 
Earnings from discontinued operations
 
$

 
$
0.01

 
 
 
 
 
$

 
$
0.01

 
 
 
 
 
Basic net (loss) earnings per common share
 
$
(0.45
)
 
$
(0.09
)
 
 
 
 
 
$
0.59

 
$
2.18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net (loss) earnings per common share
 

 

 
 
 
 
 

 

 
 
 
 
 
 
 
(Loss) earnings from continuing operations
 
$
(0.45
)
 
$
(0.10
)
 
 
 
 
 
$
0.58

 
$
2.17

 
 
 
 
 
 
 
Earnings from discontinued operations
 
$

 
$
0.01

 
 
 
 
 
$

 
$
0.01

 
 
 
 
 
Diluted net (loss) earnings per common share
 
$
(0.45
)
 
$
(0.09
)
 
 
 
 
 
$
0.58

 
$
2.18

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

 
42.0

 
 
 
 
 
42.2

 
42.0

 
 
 
 
 
 
 - Diluted
 
42.2

 
42.0

 
 
 
 
 
42.4

 
42.1

 
 
 
 






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
Entertainment and Communications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
32.6

 
$
27.8

 
$
4.8

 
17%
 
$
125.8

 
$
103.0

 
$
22.8

 
22%
 
 
 
Voice
 
6.2

 
5.7

 
0.5

 
9%
 
24.4

 
21.7

 
2.7

 
12%
 
 
 
Video
 
37.6

 
33.0

 
4.6

 
14%
 
146.7

 
123.6

 
23.1

 
19%
 
 
 
Services and other
 
0.4

 
0.8

 
(0.4
)
 
(50)%
 
1.6

 
3.4

 
(1.8
)
 
(53)%
 
 
 
 
 
76.8

 
67.3

 
9.5

 
14%
 
298.5

 
251.7

 
46.8

 
19%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
7.9

 
9.8

 
(1.9
)
 
(19)%
 
34.9

 
44.2

 
(9.3
)
 
(21)%
 
 
 
Voice
 
15.5

 
17.1

 
(1.6
)
 
(9)%
 
66.3

 
73.8

 
(7.5
)
 
(10)%
 
 
 
Services and other
 
1.1

 
0.9

 
0.2

 
22%
 
3.3

 
4.1

 
(0.8
)
 
(20)%
 
 
 
 
 
24.5

 
27.8

 
(3.3
)
 
(12)%
 
104.5

 
122.1

 
(17.6
)
 
(14)%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Services and other
 
0.4

 
0.9

 
(0.5
)
 
(56)%
 
0.7

 
3.9

 
(3.2
)
 
(82)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total consumer revenue
 
$
101.7

 
$
96.0

 
$
5.7

 
6%
 
$
403.7

 
$
377.7

 
$
26.0

 
7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
25.6

 
$
24.6

 
$
1.0

 
4%
 
100.5

 
$
96.5

 
$
4.0

 
4%
 
 
 
Voice
 
17.0

 
13.9

 
3.1

 
22%
 
63.3

 
51.7

 
11.6

 
22%
 
 
 
Video
 
0.6

 
0.6

 

 
0%
 
2.5

 
2.1

 
0.4

 
19%
 
 
 
Services and other
 
0.4

 
1.0

 
(0.6
)
 
(60)%
 
2.0

 
2.5

 
(0.5
)
 
(20)%
 
 
 
 
 
43.6

 
40.1

 
3.5

 
9%
 
168.3

 
152.8

 
15.5

 
10%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
3.8

 
4.9

 
(1.1
)
 
(22)%
 
17.1

 
20.3

 
(3.2
)
 
(16)%
 
 
 
Voice
 
23.4

 
26.4

 
(3.0
)
 
(11)%
 
97.9

 
111.5

 
(13.6
)
 
(12)%
 
 
 
Services and other
 
0.5

 
0.3

 
0.2

 
67%
 
1.1

 
1.3

 
(0.2
)
 
(15)%
 
 
 
 
 
27.7

 
31.6

 
(3.9
)
 
(12)%
 
116.1

 
133.1

 
(17.0
)
 
(13)%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Services and other
 
0.4

 
0.5

 
(0.1
)
 
(20)%
 
1.5

 
1.8

 
(0.3
)
 
(17)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total business revenue
 
$
71.7

 
$
72.2

 
$
(0.5
)
 
(1)%
 
$
285.9

 
$
287.7

 
$
(1.8
)
 
(1)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrier
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
11.3

 
$
11.1

 
$
0.2

 
2%
 
$
42.8

 
$
45.0

 
$
(2.2
)
 
(5)%
 
 
 
Services and other
 

 

 

 
n/m
 
5.4

 

 
5.4

 
n/m
 
 
 
 
 
11.3

 
11.1

 
0.2

 
2%
 
48.2

 
45.0

 
3.2

 
7%
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
7.1

 
8.2

 
(1.1
)
 
(13)%
 
30.5

 
35.8

 
(5.3
)
 
(15)%
 
 
 
Voice
 
3.7

 
3.9

 
(0.2
)
 
(5)%
 
15.4

 
16.3

 
(0.9
)
 
(6)%
 
 
 
Services and other
 
1.5

 
1.6

 
(0.1
)
 
(6)%
 
6.2

 
6.3

 
(0.1
)
 
(2)%
 
 
 
 
 
12.3

 
13.7

 
(1.4
)
 
(10)%
 
52.1

 
58.4

 
(6.3
)
 
(11)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total carrier revenue
 
$
23.6

 
$
24.8

 
$
(1.2
)
 
(5)%
 
$
100.3

 
$
103.4

 
$
(3.1
)
 
(3)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Entertainment and Communications Revenue
 
$
197.0

 
$
193.0

 
$
4.0

 
2%
 
$
789.9

 
$
768.8

 
$
21.1

 
3%






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
IT Services and Hardware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
$
41.3

 
$
20.9

 
$
20.4

 
98%
 
$
95.5

 
$
89.2

 
$
6.3

 
7%
 
 
 
Management and Monitoring
 
5.5

 
7.9

 
(2.4
)
 
(30)%
 
21.1

 
32.0

 
(10.9
)
 
(34)%
 
 
 
Unified Communications
 
7.4

 
7.3

 
0.1

 
1%
 
29.1

 
29.4

 
(0.3
)
 
(1)%
 
 
 
Cloud Services
 
17.3

 
13.3

 
4.0

 
30%
 
53.5

 
46.5

 
7.0

 
15%
 
 
 
 
 
71.5

 
49.4

 
22.1

 
45%
 
199.2

 
197.1

 
2.1

 
1%
 
 
Integration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
3.2

 
5.9

 
(2.7
)
 
(46)%
 
19.1

 
17.5

 
1.6

 
9%
 
 
 
Unified Communications
 
3.3

 
2.4

 
0.9

 
38%
 
13.2

 
10.4

 
2.8

 
27%
 
 
 
Telecom and IT hardware
 
155.3

 
37.8

 
117.5

 
n/m
 
280.3

 
205.7

 
74.6

 
36%
 
 
 
 
 
161.8

 
46.1

 
115.7

 
n/m
 
312.6

 
233.6

 
79.0

 
34%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total IT Services and Hardware Revenue
 
$
233.3

 
$
95.5

 
$
137.8

 
n/m
 
$
511.8

 
$
430.7

 
$
81.1

 
19%







Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Statements by Segment
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
2017

2016
 
$
 
%
 
2017
 
2016
 
$
 
%
 
Entertainment and Communications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
88.3

 
$
86.4

 
$
1.9

 
2%
 
$
351.6

 
$
344.8

 
$
6.8

 
2%
 
 
Voice
 
65.8

 
67.0

 
(1.2
)
 
(2)%
 
$
267.3

 
275.0

 
(7.7
)
 
(3)%
 
 
Video
 
38.2

 
33.6

 
4.6

 
14%
 
$
149.2

 
125.7

 
23.5

 
19%
 
 
Services and Other
 
4.7

 
6.0

 
(1.3
)
 
(22)%
 
$
21.8

 
23.3

 
(1.5
)
 
(6)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
197.0

 
193.0

 
4.0

 
2%
 
$
789.9

 
768.8

 
21.1

 
3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
96.7

 
92.4

 
4.3

 
5%
 
379.3

 
359.5

 
19.8

 
6%
 
 
Selling, general and administrative
 
34.2

 
34.5

 
(0.3
)
 
(1)%
 
138.7

 
141.6

 
(2.9
)
 
(2)%
 
 
Depreciation and amortization
 
45.6

 
43.8

 
1.8

 
4%
 
174.7

 
168.6

 
6.1

 
4%
 
 
Other*
 
5.0

 
7.7

 
(2.7
)
 
(35)%
 
31.9

 
8.5

 
23.4

 
n/m
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
181.5

 
178.4

 
3.1

 
2%
 
724.6

 
678.2

 
46.4

 
7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
15.5

 
$
14.6

 
$
0.9

 
6%
 
$
65.3

 
$
90.6

 
$
(25.3
)
 
(28)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IT Services and Hardware
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Professional Services
 
$
44.5

 
$
26.8

 
$
17.7

 
66%
 
$
114.6

 
$
106.7

 
$
7.9

 
7%
 
 
Management and Monitoring
 
5.5

 
7.9

 
(2.4
)
 
(30)%
 
21.1

 
32.0

 
(10.9
)
 
(34)%
 
 
Unified Communications
 
10.7

 
9.7

 
1.0

 
10%
 
42.3

 
39.8

 
2.5

 
6%
 
 
Cloud Services
 
17.3

 
13.3

 
4.0

 
30%
 
53.5

 
46.5

 
7.0

 
15%
 
 
Telecom and IT hardware
 
155.3

 
37.8

 
117.5

 
n/m
 
280.3

 
205.7

 
74.6

 
36%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
233.3


95.5

 
137.8

 
n/m
 
511.8

 
430.7

 
81.1

 
19%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
184.8

 
72.1

 
112.7

 
n/m
 
394.6

 
332.4

 
62.2

 
19%
 
 
Selling, general and administrative
 
36.1

 
15.1

 
21.0

 
n/m
 
83.7

 
58.0

 
25.7

 
44%
 
 
Depreciation and amortization
 
7.2

 
3.7

 
3.5

 
95%
 
18.1

 
13.5

 
4.6

 
34%
 
 
Other*
 
2.5

 
3.3

 
(0.8
)
 
(24)%
 
4.8

 
3.6

 
1.2

 
33%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
230.6

 
94.2

 
136.4

 
n/m
 
501.2

 
407.5

 
93.7

 
23%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
$
2.7

 
$
1.3

 
$
1.4

 
n/m
 
$
10.6

 
$
23.2

 
$
(12.6
)
 
(54)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Other includes restructuring and severance related charges, and pension settlement charges.






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
2017
 
2016
 
$
 
%
 
2017
 
2016
 
$
 
%
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
 
$
197.0

 
$
193.0

 
$
4.0

 
2%
 
$
789.9

 
$
768.8

 
$
21.1

 
3%
 
 
IT Services and Hardware
 
233.3

 
95.5

 
137.8

 
n/m
 
511.8

 
430.7

 
81.1

 
19%
 
 
Eliminations
 
(3.2
)
 
(3.2
)
 

 
0%
 
(13.2
)
 
(13.7
)
 
0.5

 
(4)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
$
427.1

 
$
285.3

 
$
141.8

 
50%
 
$
1,288.5

 
$
1,185.8